Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Tyne Improvement Bill,

Lords Amendments considered, and agreed to.

London County Council (Money) Bill (by Order),

Second Reading deferred till Thursday, at a quarter-past Eight of the clock.

FOREIGN TRADE.

Return ordered, "showing, for the last year for which figures are available:

(a) The value of all articles imported into the United Kingdom from the United States of America, Germany, France, Austria, Russia, Italy, Spain, China, Japan, and the Argentine, respectively, (i) free of duty, (ii) subject to duty;
(b) The value of all articles imported into the United States of America, Germany, France, Austria, Russia, Italy, Spain, China, Japan, and the Argentine, respectively, from the United Kingdom, (i) free of duty, (ii) subject to duty."—[Mr. Runciman.]

Oral Answers to Questions — INDIA.

UNEMPLOYMENT (EUROPEANS AND ANGLO-INDIANS).

Mr. WARDLAW-MILNE: 2.
asked the Under-Secretary of State for India whether he can form any estimate of the
number of Europeans and Anglo-Indians now unemployed in India; whether his attention has been drawn to the grave conditions arising out of such unemployment; and whether the Government of India is taking any action in the form of creating employment by means of public works or otherwise to meet the present situation?

The UNDER-SECRETARY of STATE for INDIA (Earl Winterton): My Noble Friend has no recent detailed information on the subject, but will ask the Government of India for a report.

Mr. WARDLAW-MILNE: Is the right hon. Gentleman aware that there is grave distress arising from unemployment in India and that there are some very serious cases in Calcutta?

Earl WINTERTON: Yes, Sir, and that is the reason why my Noble Friend is asking for a local report.

PILGRIMS TO THE HEJAZ.

Mr. WARDLAW-MILNE: 3.
asked the Under-Secretary of State for India whether his attention has been drawn to a letter despatched by Ibn Saud, Sultan of Nejd, on the 7th March last to the President of the Central Khilafat Committee, in which serious statements are made regarding the oppression exercised in the past upon pilgrims from India and other places proceeding to the Hejaz, and promising security and peace for the future; whether the Government of India has received any similar communication from Ibn Saud; and, if so, whether it was accompanied by any guarantees?

Earl WINTERTON: I have seen a newspaper report of the letter from the Sutlan of Nejd to the Central Khilafat Committee, but am not aware that the Government of India have received any direct communication from Ibn Saud.

COAL EXPORTS.

Mr. W. BAKER: 4.
asked the Under-Secretary of State for India whether he can state the amount of coal exported each year from India from 1920 to 1924, inclusive?

Earl WINTERTON: The total exports of coal from British India during each
of the calendar years 1920 to 1924 are as follows:



Tons.


1920
1,222,517


1921
273,648


1922
76,479


1923
136,559


1924
205,518


These figures do not include foreign coal re-exported from India.

Mr. BAKER: Can the Noble Lord say how much of this coal is going to markets hitherto supplied by this country?

Earl WINTERTON: Obviously, I should have notice of that question. Perhaps the hon. Member will put a question on this point down on the Order Paper.

MILL STRIKE, RISHRA.

Mr. JOHNSTON: 5.
asked the Under-Secretary of State for India whether he can state the present position of the strike at the Presidency Jute Mill, at Rishra?

Earl WINTERTON: The strike ended on 22nd May.

Mr. JOHNSTON: Has the right hon. Gentleman any information as to how the strike ended? Was it to the satisfaction of the employés, or were they driven back to work?

Earl WINTERTON: My Noble Friend telegraphed to India asking how the strike stood, and was informed that it had ended.

Mr. NEIL MACLEAN: What is the present position?

Earl WINTERTON: The present position is that the strike has ended.

STORES DEPARTMENT.

Mr. W. BAKER: 6.
asked the Under-Secretary of State for India how many Indians and how many Europeans have been appointed during the last three years to gazetted posts in the Indian Stores Department; at what salaries they were appointed; and the maximum salary of the post?

Earl WINTERTON: Appointments to the Indian Stores Department are made by the Government of India, but I will send the hon. Member a copy of the administration Report of the Department which will perhaps give him sufficient information for his purpose.

Mr. BAKER: 7.
asked the Under-Secretary of State for India whether his attention has been drawn to the fact that the administration Report of the Indian Stores Department published in India at the end of May, 1925, only deals with the activities of that Department during the financial year ended 31st March, 1924; and whether he will endeavour to arrange for the publication of these Reports soon after the close of the financial year with which they deal?

Earl WINTERTON: I do not know the exact date of publication, but a copy of the report reached the India Office before the end of April, 1925. The hon. Member's suggestion will be communicated to the Government of India.

OPIUM CONSUMPTION.

Mr. MORGAN JONES: 8.
asked the Under-Secretary of State for India whether he can give figures showing the consumption of opium in Calcutta, Rangoon, Amritsar, Bombay, Karachi, and Madras per 10,000 of the population; and whether he can state the normal amount per 10,000 considered adequate by the medical authorities in India.

Earl WINTERTON: The amounts consumed in Calcutta (including the suburbs and the towns of Howrah and Bally) and at Rangoon in 1923–24 were respectively 185 lbs. and 226 lbs. per 10,000. Figures for the other four towns mentioned are not available, but the amounts consumed in the districts of Amritsar, Bombay, Karachi and Madras were respectively 56, 86, 43 and 53 lbs. per 10,000. No pronouncement by the medical profession in India of the normal amount per 10,000 considered adequate is on record.

MAHARAJAH OF NEPAL (ANNUAL GEANT).

Mr. THURTLE: 10.
asked the Under-Secretary of State for India in what year the payment of an annual subsidy to the Maharajah of Nepal began; whether the present amount of 10 lakhs of rupees has been paid annually since; and for how long it is intended to continue these annual payments?

Earl WINTERTON: The annual payment of 10 lakhs of rupees has been made since 1919. The grant is subject to no limit of time.

BRITISH LEGATION, KABUL.

Mr. THURTLE: 11.
asked the Under-Secretary of State for India whether in view of the fact that diplomatic relations now exist directly between Afghanistan and Great Britain, in which India is vitally interested, and in view of the fact that the whole cost of the British Legation at Kabul is paid for out of Indian revenues, he will arrange that the diplomatic representation at Kabul is by Indians instead of Europeans?

Earl WINTERTON: The facts stated by the hon. Member do not appear to me to constitute a reason for applying a special restriction to the selection of His

STATEMENT shewing the kind, volume and value of cotton goods imported into British India from China and Japan respectively, during the calendar year 1924.






Kind.
Volume.
Value Rs.


China (including Hong Kong).
Twist and Yarn
235,620 lbs.
4,55,400


Piece goods—grey (unbleached)
7,573,629 yds.
27,80,201


Japan
…
…
…
Twist and Yarn
30,769,770 lbs.
4,39,27,861






Hosiery
—
81,20,066






Piece goods—grey (unbleached)
107,926,155 yds.
4,08,75,979






Piece goods—white (bleached)
3,848,033 yds.
16,29,395






Coloured, printed or dyed
33,885,070 yds.
1,25,33,834


In addition, some part of goods to the value of Rs. 1,03,72,568, described in the returns as "other sorts," may have come from China and Japan.

BENGAL ORDINANCE (ARRESTS).

Mr. THURTLE: 13.
asked the Under-Secretary of State for India why prisoners detained under the Bengal Ordinance are not supplied with copies of the allegations framed against them on the terms of which they have been arrested and imprisoned?

Earl WINTERTON: I quote for the hon. Member's information the reply given in the Bengal Legislative Council on the 26th February last to the same question:
The charges are put to the détenus in order to inform them of the nature of the allegations made against them and to give them an opportunity of making any reply they think fit. This purpose is served by reading the charges over to them, and there is no necessity to give them copies.

Mr. THURTLE: Is the Noble Lord aware that it is impossible for these persons who are so charged to obtain fully the nature of the charges which are made against them, and will he see that the charges are supplied to the prisoners in writing?

Majesty's representatives at Kabul, and I am not prepared to suggest it.

COTTON (IMPORTS FROM CHINA AND JAPAN).

Mr. JOHNSTON: 12.
asked the Under-Secretary of State for India whether he will state the kind, volume and value of the cotton goods exported from China and Japan, respectively, to India for the year 1924?

Earl WINTERTON: As the question involves a tabular statement, I propose, with the hon. Member's permission, to circulate the answer in the OFFICIAL REPORT.

Following is the tabular statement promised:

Earl WINTERTON: No. I should not be prepared to ask my Noble Friend to interfere with the discretion of the local Government in this matter. An exactly similar question to this was asked in the local Council and was dealt with by the appropriate Member of the Government, and I am sure with all the facts which there are in connection with the case that there is no need for any alteration of the procedure.

COAL MINES (WOMEN AND CHILDREN).

Mr. DUNNICO: 14.
asked the Under-Secretary of State for India how many women are working in coal mines in India, and what proportion of these are working underground; how many children under 12 are working in the above mines; and what is the relative number of women and children to men working in the year 1902, and the number of mines worked in 1902 compared with the present time?

Earl WINTERTON: As the reply to this question contains a number of figures,
I propose, with the hon. Member's permission, to circulate it in the OFFICIAL REPORT.

Following is the reply:

The average daily number of women employed in coal mines in British India in 1923 (the latest year for which figures are available) was 63,411, of whom 40,136 were employed underground. The employment of children under 13 is now prohibited. The average daily number of children under 12 employed in 1923 was 3,850, and the number of men was 115,340. The average daily numbers employed (above and below ground) in 1902 were: men, 59,686; women, 29,158; and children, 3,661. The number of mines worked in 1902 was 305, and in 1923 the number was 942.

AIR COMMUNICATIONS WITH INDIA.

Sir HARRY BRITTAIN: 15.
asked the Under-Secretary of State for India whether, in view of the desire to establish air communications with India in the shortest possible time, he is able to state that the Government of India is collaborating fully with the Air Ministry in making arrangements for landing grounds and other necessary requirements?

Earl WINTERTON: I am glad to be able to inform my hon. Friend that the Government of India are collaborating fully with the Air Ministry in connection with the establishment of air communications with India.

Oral Answers to Questions — ARMY (INDIANISATION).

Major HORE-BELISHA: 1.
(for Lieut.-Commander KENWORTHY) asked the Under-Secretary of State for India whether the Committee to report on the free admission of Indians to commissioned ranks in the Indian Army, promised by the late Commander-in-Chief and the Home Member of the Government of India, has yet been appointed; and if he can state the names of that Committee?

Earl WINTERTON: The hon. and gallant Member presumably refers to the undertaking given by the Government of India in March to consider the appointment of a Committee to examine the means of attracting the best qualified
Indian youths to a military career, and of giving them a suitable military education. With my Noble Friend's concurrence, the Government of India have now decided to appoint such a Committee. The Chairman will be Lieut.-General Sir Andrew Skeen, the Chief of the General Staff in India. The Government of India are not yet in a position to announce further details; but the Committee will include non-official members, representing both the military classes of the population and Indian political opinion.

Oral Answers to Questions — CINEMATOGRAPH FILMS.

Major HORE - BELISHA (for Lieut.-Commander KENWORTHY): 16.
asked the Under-Secretary of State for India whether the Government of India are aware of the very small proportion of British-produced cinematograph films shown in the cinematograph theatres in India as compared to films of foreign origin; whether he is aware of the probable effects on British prestige of this state of affairs; and whether any steps are contemplated to ensure a greater proportion of British-produced films being shown to the public in India?

Earl WINTERTON: I believe that it is the case that in India, as elsewhere, a large majority of the films exhibited are not of British production. The exhibitors, as I understand, have to take what is available, is desired by their customers, and is passed by the censors. A close observation is, however, maintained over the film theatres, and as a recent Debate in the Council of State shows, there is an informed Indian public opinion on the subject. I have also information, not very definite, that the production of films in India itself is increasing.

Oral Answers to Questions — PROPOSED SECURITY PACT.

Captain GARRO-JONES: 19.
asked the Secretary of State for the Colonies whether the Government have communicated to the Dominions the terms of the proposed European Security Pact and, if so, when the communication was made; and what reply has been received from Canada, Australia, South Africa, and New Zealand?

The SECRETARY of STATE for the COLONIES (Mr. Amery): I would refer the hon. Member to the first part of the answer which I gave to him on 18th June. We have so far received no comment on the proposals for a Pact from any of the. Governments referred to.

Oral Answers to Questions — FINANCE BILL.

LACE DUTY.

Sir GERALD STRICKLAND: 21.
asked the Secretary of (State for the Colonies whether he will lay before the Board of Trade the special circumstances of Malta, Gozo, and St. Helena, with reference to lace as a household industry, largely organised by charitable enterprise as the means of living at below the wage necessary to maintain health for a large number of women and children, with a view to the complete exemption from duty of hand-made lace from those islands?

Mr. AMERY: I have already brought to the notice of the Board of Trade and Treasury the special circumstances of these industries, but I fear that it would not be possible to give lace produced in any particular Colony more favourable treatment than lace from other sources within the Empire.

Captain WEDGWOOD BENN: Then it comes to this—that the new proposal is one to tax an Imperial product?

NEW IMPORT DUTIES.

Mr. H. WILLIAMS: 33.
asked the Parliamentary Secretary to the Overseas Trade Department if he will state the total value of the imports during 1924 of those commodities on which new customs duties are imposed in the Finance Bill?

Mr. A. M. SAMUEL (Secretary, Overseas Trade Department): The total value of the goods imported during 1924 on which new customs duties are proposed in the Finance Bill, so far as these goods are separately distinguished in the trade accounts for that year, was approximately £45,000,000. It is not possible, however, to state the value of the imports of goods containing silk, artificial silk, lace and embroidery, but not classified under these headings.

Captain BENN: How, then, did the Chancellor of the Exchequer arrive at his estimate of the revenue in these cases?

Mr. SAMUEL: I would suggest that the hon. and gallant Member should put that question to the Chancellor of the Exchequer.

Oral Answers to Questions — EAST AFRICA (SANITARY INSPECTORS).

Colonel DAY: 22.
asked the Secretary of State for the Colonies if his attention has been drawn to the need for a large increase in the number of sanitary inspectors required in East Africa; and will he state whether any steps are being taken towards meeting this demand by the training of native sanitary orderlies, to work under the supervision of district medical or administrative officers?

Mr. AMERY: This question is dealt with in the Report of the East Africa Commission, and I shall not fail to refer to it in communicating with the various Governments in regard to the Report.

Oral Answers to Questions — SLEEPING SICKNESS (ENTEBBE LABORATORY).

Sir GEOFFREY BUTLER: 23.
asked the Secretary of State for the Colonies whether the Government of Uganda has been approached by the League of Nations with a request for the provision of hospitality at the Entebbe Laboratory for a Commission to investigate sleeping sickness; and what, if any, has been the reply returned?

Mr. AMERY: The appointment of such a Commission was recommended to the Council of the League by the International Conference on Sleeping Sickness which recently sat in London. No actual proposal has yet been received from the League, but I have ascertained that if such a proposal is made, the Government of Uganda will gladly co-operate by placing the laboratory at Entebbe at the disposal of the Commission.

Oral Answers to Questions — NIGERIA (RAILWAY CONSTRUCTION).

Mr. SANDEMAN: 24.
asked the Secretary of State for the Colonies whether, in view of the increase of spindles and the decrease of the cotton crop in the
United States, he can do anything to expedite the construction of the new railways in Northern Nigeria, with the object of stimulating the growing of raw cotton?

Mr. AMERY: The position is as stated in my reply to my hon. Friend on the 17th June. It is essential that proper consideration of the best routes be given before any new lines are sanctioned, and I recently asked the Nigerian Government to let me have their recommendations at an early date.

Mr. WARDLAW-MILNE: 27.
asked the Secretary of State for the Colonies what railway construction is in progress in Nigeria at the present time; how long the Eastern Railway has been under construction and when it is likely to be completed; whether the construction is being carried out by Government agency and finance; who are the consulting engineers in this country; and what is the authority supervising the staff employed and the accounts?

Mr. AMERY: The final section, from the River Benue to Kakuri, of the Nigerian Eastern Railway, and a branch line from Kagoro to Bukuru, are under construction. They are expected to be completed in 1926 or 1927. The construction is being carried out by the Nigerian Government and the cost met from Nigerian loan funds. No firm of consulting engineers is employed. Construction is in charge of a chief construction engineer, who is responsible to the Nigerian Government. The accounts are audited by the Director of Colonial Audit, like other Nigerian Government expenditure. The first section of the Nigerian Eastern Railway, from Port Harcourt to Enugu, was commenced in 1913 and opened in 1916. The second section, from Enugu to the Benue, was started in March 1921, and opened in August, 1924.

Mr. WARDLAW-MILNE: Do I understand that no consulting engineers are being employed in this country?

Mr. AMERY: The Crown Agents for the Colonies act as consulting engineers.

Oral Answers to Questions — KENYA (Dr. LEYS' BOOK).

Mr. MORGAN JONES: 25.
asked the Secretary of State for the Colonies if he has received a despatch from the Government of Kenya with regard to the charges contained in Dr. Norman Leys' book entitled "Kenya"?

Mr. AMERY: Yes, Sir.

Oral Answers to Questions — BRITISH GUIANA (DISTURBANCE).

Mr. MORGAN JONES: 26.
asked the Secretary of State for the Colonies whether he is aware of the fact that in April last 14 men and women, members of an unarmed deputation of strikers, were killed and many more wounded by the military forces at George Town, Jamaica; and whether he will cause a Court of Inquiry to be set up to investigate the whole affair and bring those guilty to trial?

Mr. AMERY: The hon. Member presumably refers to the disturbances which took place at Ruimveldt, in British Guiana, on 3rd April, 1924. If so, an inquiry was held last year, and the Report, which made it clear that the police had taken the only course possible to them in self-defence and for the protection of the public, engaged the attention of my predecessor. I see no reason to reopen the matter.

Oral Answers to Questions — AFRICAN COLONIES (NATIVE LABOUR).

Lieut.-Colonel HENDERSON: 29.
asked the Secretary of State for the Colonies when the custom of the conscription of native labour for road or railway construction was first sanctioned by ordinance in any of the Colonies or Protectorates of Africa; whether it was extended at any time last year; whether he is aware that the custom is specifically allowed by the League of Nations; and whether the use of compulsory labour is, in every case, limited to a maximum number of days in each year?

Mr. AMERY: It has not been possible in the time at my disposal to ascertain the date of the first ordinance of the kind; in the case of Kenya the power was first regulated by law in 1920. No alteration of the law was made last year. The
answer to the last two parts of the question is in the affirmative, except that in Sierra Leone there appears to be no legal limitation on the number of days' work which a paramount chief can demand, though no doubt in practice it is limited by custom to a reasonable number. I may add that Papers on this matter, so far as it relates to Kenya, will be laid before Parliament at any early date.

Oral Answers to Questions — BRITISH EMPIRE EXHIBITION (ADMISSION CHARGE).

Colonel DAY: 31.
asked the Parliamentary Secretary to the Overseas Trade Department whether, in view of the fact that only 43,827 persons visited the British Empire Exhibition on Monday, 15th June, and in view of the many complaints of stall-holders of the bad attendances owing to the high cost of admission, he will consider the advisability of recommending to the management authorities a popular price of admission for certain days in the week at the price of 6d.?

Sir H. BRITTAIN: 34.
asked the Parliamentary Secretary to the Overseas Trade Department whether he has any further statement to make with regard to the proposed alteration of either entrance alone or fares and entrance to the British Empire Exhibition?

Mr. SAMUEL: As the hon. Members will be aware from the Press, the British Empire Exhibition authorities have made arrangements with the railway companies whereby the price of combined return railway and admission tickets issued within the. London zone has been reduced from 2s. 9d. to 2s. or 1s. 6d., according to the length of the journey, and with the tramway and omnibus undertakings whereby combined omnibus, tramway and admission tickets will be available at the same rates. I have brought the suggestion made by the hon. and gallant Member for Central Southwark (Colonel Day) to the notice of the exhibition authorities, but they regret that they are unable to adopt it.

Colonel DAY: Is the hon. Gentleman aware that there are many hundreds of thousands of people who never have the
opportunity of visiting this exhibition, and will he consider recommending that it be thrown open on Sundays?

Mr. SAMUEL: No, Sir.

Mr. SPEAKER: That question does not arise here.

Oral Answers to Questions — COTTON MANUFACTURE (CHINA, JAPAN AND INDIA).

Mr. JOHNSTON: 32.
asked the Parliamentary Secretary to the Overseas Trade Department the number of cotton spindles and looms in China, Japan, and India, respectively, in 1914 and at the present time?

Mr. SAMUEL: I will, with pleasure, obtain as full information as I can on the subject of the hon. Member's question. As this will take a few days, perhaps he would be good enough to repeat his question at a later date. I am trying to get the information now.

Oral Answers to Questions — CHARITY LAND, PORTHCAWL.

Mr. MORGAN JONES: 35.
asked the Minister for Agriculture whether he has received an application from the Porthcawl Rural District Council for an exchange of the charity land of the labouring poor; whether he has received evidence that the proposed exchange would be a violation of the trust; whether he is aware that the Charity Commissioners have already refused the application; and what action he proposes to take?

The MINISTER of AGRICULTURE (Mr. Edward Wood): I have received an application for an exchange of the land to which the hon. Member refers, and also representations to the effect that the exchange would be a violation of the trust. I am aware that the Charity Commissioners have already refused the application, and, before arriving at any decision, I propose to await the result of certain inquiries that I am making in the matter.

Mr. JONES: May I take it that all the interests concerned will be consulted on this matter before any decision is taken?

Mr. WOOD: Oh, yes; I will take care to see that the fullest audience is given to them.

Oral Answers to Questions — BEET-SUGAR FACTORIES (CAPITAL COST).

Mr. CHRISTIE: 36.
asked the Minister of Agriculture what is the estimated total capital cost of each of the beet-sugar factories now in course of erection; and what proportion of such outlay has been or will be expended abroad?

Mr. WOOD: The total estimated capital cost of the six factories now in course of erection is £1,826,000, of which £1,563,000, or over 85 per cent., is being expended in this country. I will circulate the figures for each factory in the OFFICIAL REPORT.

Mr. MAXTON: Can the right hon. Gentleman tell us how much of the £1,563,000 which is being spent at home is being expended by foreign capitalists?

Mr. WOOD: I could not tell the hon. Gentleman that without inquiry, but I will certainly make inquiries. I imagine, however, that the money expended here will be equally welcome whether it be expended by foreign capitalists or by capitalists at home.

Mr. MAXTON: The point about which I am anxious, and about which the right hon. Gentleman might tell me when he has the information, is as to how much of the subsidy that will be required from the British Treasury is going into the pockets of foreign capitalists?

Mr. WOOD: Perhaps the hon. Gentleman will put a question down asking for the information, when I shall be very pleased to give it.

Following are the figures promised:



Estimated total capital cost.
Estimated outlay abroad.



£
£


Ely
358,100
81,000


Ipswich
377,900
105,000


Bury St. Edmunds
300,000
30,000


Wissington
300,000
30,000


Spalding
245,000
8,200


Kidderminster
245,000
8,200


Total
£1,826,000
£262,400

Oral Answers to Questions — UNEMPLOYMENT.

DRAINAGE AND SEA DEFENCE.

Lieut.-Colonel HENEAGE: 38.
asked the Minister of Agriculture how many unemployed can be put at short notice in drainage and sea defence schemes already prepared by the Ministry of Agriculture, and where these schemes will operate?

Mr. WOOD: My hon. and gallant Friend will be aware that the Ministry's drainage schemes for the relief of unemployment for the season 1924–25 were completed on 30th May, except in a few instances where short extensions were granted. I am at present giving my attention to the whole question of the future of schemes of this nature, but I am not yet in a position to make an announcement.

IRON AND STEEL TRADES.

Mr. J. HUDSON: 57.
asked the Minister of Labour the number of unemployed workers in the iron and steel trades on 1st November, 1924, and on the latest date for which the information is available?

The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. Betterton): The number of persons registered as unemployed in Great Britain on 27th October, 1924, at steel melting and iron puddling furnaces, iron and steel rolling mills and forges was 48,557. The corresponding figure for 25th May, 1925, was 48,888.

Brigadier-General Sir HENRY CROFT: Do not the imports of manufactured goods of that description represent a higher amount of labour than those quoted by the hon. Gentleman?

Mr. SPEAKER: That is a matter for the Board of Trade.

JUVENILES (COMMITTEE OF INQUIRY).

Mr. CADOGAN: 58.
asked the Minister of Labour whether any steps have been taken to set up the promised Committee of Inquiry on juvenile Unemployment?

The PRESIDENT Of the BOARD of EDUCATION (Lord Eustace Percy): I have been asked to reply to this question. My right hon. Friend the Minister of Labour and I are appointing a Com-
mittee, with the following terms of reference:
To inquire into and advise upon the public system of education in England and Wales in relation to the requirements of trade and industry, with particular reference to the adequacy of the arrangements for enabling young persons to enter into and retain suitable employment.
We hope to be in a position to make an announcement as to the personnel of the Committee at an early date.

Mr. HURD: Can the right hon. Gentleman say whether agriculture is brought within the scope of this inquiry?

Lord E. PERCY: Yes, Sir.

Mr. MAXTON: Am I to understand that the inquiry does not extend to Scotland?

Lord E. PERCY: No, Sir. I am not prepared at this moment to say definitely whether or not the inquiry will cover Scotland. Perhaps the hon. Member will put a question to me a little later, and I shall be able to tell him.

ROAD WORK (GEANTS).

Mr. R. MORRISON: 83.
asked the Minister of Transport, in view of the financial difficulties presented to urban authorities in launching unemployment schemes in respect of work on second class roads consequent upon the condition laid down in Clause 7 of the Unemployment Grants Committee's Forms (U. G. C, 9 and 10), whether he is prepared to take steps to amend such condition so as to admit of the 25 per cent, grant ordinarily obtainable being available in addition to a sufficient portion of the grant which would be made by the Unemployment Grants Committee if the subject matter of the scheme was otherwise than second class roads, and in order that the combined grants should at least equal the full grant obtainable from the Unemployment Grants Committee in respect of other works?

The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Lieut.-Colonel Moore-Brabazon): I am afraid it is not possible to depart from the rule that schemes assisted from the Road Fund cannot in addition draw grants from the Unemployment Grants Committee and vice versa. For this
reason schemes coming within the category of normal maintenance and improvement, towards which "classification" grants are made from the Road Fund, cannot obtain further assistance from the Unemployment Grants Committee.

Mr. MORRISON: In view of the increasing urgency of the unemployment problem in this country, and the fact that local authorities in those areas most afflicted with unemployment are almost at a standstill in their efforts to provide schemes of work, could not the hon. and gallant Gentleman see whether something cannot be done in this matter?

Oral Answers to Questions — FLORA MacDONALD'S HOME.

Mr. MacKENZIE LIVINGSTONE: 39.
asked the Under-Secretary of State for the Home Department, as representing the First Commissioner of Works, whether he is now in a position to announce the result of his inquiries regarding the desirability of preserving the ruins of the home in South Uist of Flora MacDonald, the Highland heroine?

Mr. GODFREY LOCKER-LAMPSON (for the FIRST COMMISSIONER of WORKS): From the inquiries which have been made, it does not appear to the First Commissioner to be necessary that his Department should assume the guardianship of these ruins, but it is proposed to schedule them under the Ancient Monuments Act.

Oral Answers to Questions — GOVERNMENT DEPARTMENTS.

MINISTRY OF LABOUR.

Viscount SANDON: 40.
asked the Under-Secretary of State for the Home Department, as representing the First Commissioner of Works, if that Department intend to take any action towards carrying out the recommendation made in paragraph 5 of the Report of the Estimates Committee on the Ministry of Labour?

Mr. LOCKER-LAMPSON: A scheme for the concentration of the Unemployment and Insurance Department of the Ministry of Labour from Queen Anne's Chambers in semi-permanent buildings on the Montagu House site is in an advanced stage of preparation. Pro-
vision for the erection of these buildings has already been made in the Vote for Labour and Health Buildings, Great Britain, for the current financial year.

INSPECTOR OF TAXES OFFICE, SOUTHPORT.

Lieut.-Colonel WHITE: 42.
asked the Under-Secretary of State for the Home Department, as representing the First Commissioner of Works, when it is anticipated that more suitable accommodation will be available for the office of His Majesty's Inspector of Taxes than 5, Talbot Street, Southport, where 35 officers are working in 11 small rooms, including attics and basement on four different floors of a converted dwelling-house; and whether, in view of the serious effect on the efficiency of the district which must result from a continuance of the present conditions, temporary arrangements can be made pending removal to suitable premises.

Mr. LOCKER-LAMPSON: A scheme for the provision of more suitable accommodation for the staff in question is at present under discussion with the Commissioners of Inland Revenue; meantime, to improve the existing conditions, arrangements have been made to redecorate certain of the rooms and search is being made for temporary additional accommodation.

Lieut.-Colonel WHITE: Do I gather from the reply that there is no intention of moving the building, the rooms in which are totally insufficient?

Mr. LOCKER-LAMPSON: We are in search of suitable accommodation, and I hope we shall house comfortably all the staff.

NATIONAL HEALTH INSURANCE DEPARTMENT, ACTON (WOMEN CLERKS' FARES).

Mr. MARCH: 62.
asked the Minister of Health if his attention has been called to the inconvenience and hardship imposed on the women clerks employed in the central index register section of the National Health Insurance by the recent transfer of this Department from Westminster to Bromyard Avenue, Acton, owing to the long journey to Acton, taking in many instances upwards of three hours each day, and costing from 8s. to 10s. per week in fares, which have to be paid put of their salary of 35s. per week, which after other deductions are made for health and unemployment
insurances does not leaves these women with a sufficient amount for their maintenance; and will he look into this matter with a view to redress?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Sir Kingsley Wood): The work in question has recently been transferred from the Central Index Committee to my Department on an agency basis, and the offices at Acton are the only offices available to the Department at which it can be efficiently performed. The officers mentioned by the hon. Member who formed part of the staff of the Central Index Committee engaged on a weekly basis were given the opportunity of continuing the work under the Department in a temporary capacity, and were at the same time informed where the work would in future have to be done. With few exceptions they accepted the work on this condition, and while my right hon. Friend sympathises with any individual cases of hardship, he is afraid that he cannot see his way to take any action in the matter.

Mr. MARCH: Was any question raised as to whether there would be any allowance for travelling expenses for any who went from this quarter?

Sir K. WOOD: I have not heard that. If the hon. Member will put that question to me, I will inquire and let him know.

Sir HARRY BRITTAIN: Is there not some compensating advantage in the improvement in health of all whose duties take them to Acton?

Oral Answers to Questions — PUBLIC PARKS (LITTER)

Colonel APPLIN: 41.
asked the Under-Secretary of State for the Home Department, as representing the First Commissioner of Works, whether his attention has been drawn to the unsightly condition of Hyde Park and the park of St. James, due to paper and other refuse thrown about by holiday makers; and if he will take steps to preserve the amenities of our public parks by issuing a Regulation on the subject?

Mr. LOCKER-LAMPSON: The First Commissioner is fully aware of the nuisance caused by the deposit of litter in the Royal Parks, on the collection of which heavy expenditure is continually being incurred. The Rules for the parks already forbid the committal of this
nuisance, and it is proposed shortly to seek powers from Parliament enabling these Rules to be given, practically speaking, the effect of Regulations.

Colonel APPLIN: Would the hon. Gentleman consider the necessity for educating our school children not to throw paper about the streets, which I think is the crux of the matter?

Sir HENRY CRAIK: Would it not be perfectly easy to stop this selfish carelessness by having a few plain-clothes constables to detect the offenders, and summon them?

Mr. DUNCAN: You might get some in the House of Commons as well.

Mr. LOCKER-LAMPSON: I think the best method would be to embody the Rules in Regulations with, perhaps, statutory authority.

Mr. STEPHEN: Will the Minister apply the Rules to Members of this House?

Viscountess ASTOR: Will the hon. Gentleman also bring to the notice of Members that not only do they throw paper down, but waste a great deal of paper?

Mr. NEIL MACLEAN: Was not that seen at Ascot last week?

Oral Answers to Questions — HOUSE OF COMMONS (LATE SITTINGS).

Mr. PENNY: 43.
asked the Under-Secretary of State for the Home Department, as representing the First Commissioner of Works, what is the additional cost in wages, lighting, heating and ventilation of a sitting of this House that lasts up to 5 a.m., over and above the cost of an ordinary sitting?

Mr. LOCKER-LAMPSON: The additional cost, so far as my department is concerned, is approximately £5 per hour for lighting, heating and ventilation, which means that for a sitting lasting until 5 o'clock the following morning the additional cost would be £30.

Mr. PENNY: In view of the desire for economy, and in fairness to hon. Members opposite, seeing that they cannot get to their homes between half-past twelve and
six, will the Government investigate whether it is cheaper to take them home by char-a-banc or provide sleeping accommodation, so as to relieve other Members from attending all night sittings which are unnecessary?

Mr. SPEAKER: This seems like a speech.

Mr. MAXTON: Do I understand that no extra cost is incurred in wages, and, if not, will the hon. Gentleman seriously consider making additional payment to the employés who are detained on these occasions?

Mr. LOCKER-LAMPSON: Wages are not paid by the Office of Works, but by the Serjeant-at-Arms.

Mr. MACLEAN: Will the hon. Gentleman consider the advisability of the House meeting at eleven o'clock in the morning?

Mr. PENNY: Can the hon. Gentleman give me an idea what the wages cost, in addition to the £30 he mentioned?

Mr. LIVINGSTONE: Is not the policy suggested by the hon. Member a penny wise one?

Mr. LOCKER-LAMPSON: The wages do not come on the Vote for the Office of Works, but on that of the Serjeant-at-Arms.

Captain GARRO-JONES: Will the hon. Gentleman consider how much might be saved by having no Opposition at all?

Sir G. STRICKLAND: 50.
asked the Prime Minister whether he is prepared to consider a revision of the rules as to transport allowances for Members of the House with a view to diminish the incentives for all-night sittings?

The PRIME MINISTER (Mr. Baldwin): I am not clear in what way revision of Members' travelling allowances will achieve the object which my hon. Friend has in view.

Sir G. STRICKLAND: Is the right hon. Gentleman aware that the restriction of travelling allowances induces many Members to remain here from the end of "omnibus time" to the end of "no omnibus time"?

Major CRAWFURD: How will any increase in transport facilities help when there is no transport?

Oral Answers to Questions — CHINA.

Mr. MACLEAN: 53.
asked the Secretary of State for Foreign Affairs whether any of the 759,839 Chinese population of the international settlement at Shanghai own any land or buildings in Shanghai?

The SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Austen Chamberlain): The answer is in the affirmative so far as beneficial ownership is concerned.

Mr. MACLEAN: Have they also the right to be represented on the Municipal Council of Shanghai?

Mr. CHAMBERLAIN: No.

Mr. MACLEAN: Then is it the case that the reply I received from the Foreign Office last week is incorrect in stating that representation was based upon the ownership of lands and buildings?

Mr. CHAMBERLAIN: It is based upon ownership of lands and buildings as they appear in the ratepayers' list. The beneficial ownership is not always the same as the ownership that appears on the ratepayers' list.

Mr. MACLEAN: Then is beneficial ownership only that which applies to the Chinese, and European ownership is not beneficial?

Mr. CHAMBERLAIN: European ownership is actual.

Mr. MACLEAN: Will the right hon. Gentleman explain what actually is the method of representation, and the manner in which representation is given in Shanghai?

Mr. CHAMBERLAIN: If the hon. Member wants further information, it would be more satisfactory to him, and certainly to me, if he would put a precise question on the Paper and I will endeavour to answer it with perfect frankness.

Mr. MACLEAN: I put a precise question on the Paper last week and the reply I received was that representation upon the Council was based upon ownership of lands and buildings. There was no distinction as to what kind of ownership.

Mr. CHAMBERLAIN: The hon. Member misunderstood the answer given him the other day. That is why I suggest he
should put a considered question on the Paper and enable me to give him a considered answer, which I hope will make the matter quite plain.

Mr. MACLEAN: Might it not be the case that you misunderstood the question, instead of me misunderstanding the answer?

Mr. MACLEAN: 54.
asked the Secretary of State for Foreign Affairs whether he has asked for or will consider asking for a copy of the local police regulations in Shanghai?

Mr. CHAMBERLAIN: Yes, Sir.

Mr. RENNIE SMITH: 55.
asked the Secretary of State for Foreign Affairs if trade unions in Shanghai are legally recognised; and, if not, will he take steps to secure this recognition?

Mr. CHAMBERLAIN: There are no foreign trade unions in Shanghai. The information which I have regarding the position of Chinese trade unions under Chinese law, which is the law applicable, will be contained in the forthcoming White Paper on labour conditions in China.

Mr. RENNIE SMITH: 48.
asked the Prime Minister, in view of the representations made to him by the British Trade Union Congress concerning the situation in Shanghai, whether he is prepared to appoint a trade union delegation to investigate the industrial conditions which prevail in Shanghai?

The PRIME MINISTER: No, Sir; I cannot accept this suggestion.

Oral Answers to Questions — ROYAL NAVY.

DEVONPORT DOCKYARD (APPRENTICES).

Major HORE-BELISHA: 44.
asked the First Lord of the Admiralty how many apprentices completed their training in His Majesty's Dockyard, Devonport, during 1922, 1923 and 1924, respectively; and how many of these have been retained in Devonport Dockyard as hired men since completing their apprenticeships, showing the figures in respect of each of the years mentioned?

The PARLIAMENTARY SECRETARY to the ADMIRALTY (Mr. Davidson): In 1922, 169 apprentices completed their
training and 76 were retained as hired men. In 1923 the figures were 645 and 455 and in 1924, 254 and 248 respectively.

Major HORE-BELISHA: What steps is the hon. Gentleman taking to get these lads work?

Mr. DAVIDSON: I have already answered questions on that subject. Whenever there is a vacancy they have consideration.

CHIEF ARTISANS.

Major Sir BERTRAM FALLE: 51.
asked the Parliamentary Secretary to the Admiralty why chief artisans have been withdrawn from sea service and the complements reduced accordingly; whether it is realised that additional sea service for petty officer artisans is caused by this change; and if, in view of the small number of chief artisans allowed in the established numbers, he will take steps to increase the establishment to permit of chief artisans serving in the complements of all destroyer and submarine repair ships and the principal flagships?

Mr. DAVIDSON: The appointments for chief artisans were altered because, with 2½ years' commissions and a larger proportion of ships on foreign service, it was found that a considerable number of these ratings had to be drafted abroad with less than a full commission to serve, and in some cases during the last year of their engagements. The slight increase in sea service for the lower grade of artisan, is, I am afraid, inevitable. It is not intended to increase the establishment of artisans at the present time.

Oral Answers to Questions — INTERNATIONAL FOOD PROBLEMS.

Mr. DALTON: 45.
asked the Prime Minister whether his attention has been drawn to the recommendation of the Royal Commission on Food Prices that the Government should exercise its influence to secure that the economic section of the League of Nations shall make a continuous study of international food problems and prepare periodical Reports for submission to the Council of the League; and what steps His Majesty's Government has taken or proposes to take in the matter?

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Sir Burton Chadwick): I think it would be best to wait until the Food Council is established before deciding what action should be taken in this matter.

Oral Answers to Questions — RUSSIA (GRAIN CROP).

Mr. MAXTON: 47.
asked the Prime Minister whether he is aware that Russia will be able to export about 5,000,000 tons of grain from her 1925 harvest; and whether, in view of the high cost of bread in Great Britain, which presses heavily on the working-class families, the Government will take steps to purchase the whole of Russia's exportable grain and market it in Great Britain at a price to cover the bare expenses?

Sir B. CHADWICK: I have been asked to reply. I am advised that it is too early to form any trustworthy estimate of the Russian grain crop, although reports indicate that if the harvest is favourable there should be some exportable surplus. The answer to the last part of the question is in the negative, and in this connection I may point out that the Royal Commission on Food Prices were not convinced that State purchases would result in cheapening the food of the people, and recommended the Government to refrain from embarking upon them.

Oral Answers to Questions — IMPERIAL CIVIL RESEARCH COMMITTEE.

Mr. RENNIE SMITH: 49.
asked the Prime Minister what are the constitution and duties of the proposed Imperial Civil Research Committee?

The PRIME MINISTER: The constitution and functions of the Committee of Civil Research are described in a Treasury Minute of the 13th June, which I propose to lay before Parliament without delay. I am sending a copy of the Minute to the hon. Member.

Oral Answers to Questions — TELEPHONE SUBSCRIBERS' (DEPOSIT).

Mr. W. THORNE: 59.
asked the Postmaster-General whether the £1 10s. deposit required from telephone sub-
scribers has now been reduced to £1; and, if so, whether it is his intention to refund the 10s. of those subscribers who have already deposited £1 10s.?

The ASSISTANT POSTMASTER-GENERAL (Viscount Wolmer): The minimum telephone deposit has been reduced to £1, and those subscribers who have deposited £1 10s. will be credited with 10s. through the accounts to be rendered next month, except in cases where the charge for the quarter's calls appreciably exceeds £1 10s.

Oral Answers to Questions — WIRELESS AERIALS.

Read-Admiral BEAMISH: 61.
asked the Minister of Health if he is aware that his officials are refusing to allow local authorities to permit the erection of wireless aerials on State-aided houses unless the said authorities accept the risk of fire from lightning; is he aware that insurance companies accept such risk without extra premium; is he aware that the prospect of law suits prevents local authorities from insuring at 6d. a house to cover the risk from an aerial; and can he, in view of the hardship involved, see his way to bringing the Government insurance scheme for State-aided houses into conformity with normal commercial procedure?

Sir K. WOOD: I think the hon. and gallant Member is under some misapprehension in the matter to which he refers. No objection has been raised by my right hon. Friend's Department to the erection of wireless aerials on State-aided housing schemes provided that the usual precautions are taken for the proper earthing of the installation.

Oral Answers to Questions — GERMANY (EXPORTS AND IMPORTS).

Sir FREDRIC WISE: 64.
asked the President of the Board of Trade what are the exports and imports, respectively, of the German Republic since 1st January, 1925, to as near a date as possible?

Mr. SAMUEL: According to the German official trade returns, the total value of merchandise imported into Germany for home consumption from 1st January to 30th April, 1925, amounted
to, roughly, 4,400 million gold marks; and the total value of domestic exports during the same period amounted to 2,700 million gold marks.

Captain BENN: Can the hon. Member explain how reparations are to be paid, if there is a constant import surplus?

Mr. SAMUEL: The reparation figures are not included in the figures.

Sir F. WISE: These figures do not include the gold?

Mr. SAMUEL: I cannot tell off-hand. If the hon. Member will put down a question, I will find out.

Oral Answers to Questions — MENTALLY DEFECTIVE CHILDREN, WEST RIDING.

Mr. PALING: 66.
asked the President of the Board of Education whether, in view of the fact that no schools are provided by the West Riding local education authority for the 528 children within their area ascertained to be mentally defective within the meaning of the Education Act, 1921, he proposes to take any steps to ensure that proper educational facilities are provided for such children?

Lord E. PERCY: I am informed that the West Riding authority are making arrangements in accordance with the suggestion contained in Circular 1349 (of which I am sending the hon. Member a copy) for the supervision of all mentally defective children in the area whose admission to special schools cannot be secured. The matter is one which I have no doubt will be further dealt with in the programme of educational development which I have asked the authority to submit to me.

Mr. PALING: Is there any prospect that they are going to build schools in the West Riding? There has been nothing done for these children up to the present. Can the right hon. Gentleman push them on to do something in that direction?

Mr. R. MORRISON: The right hon. Gentleman said the local authority is making arrangements for supervision. Does he mean by that supervision of the education of the children?

Lord E. PERCY: If the hon. Member will read Section 1349 he will see what I mean. In reply to the first supplementary, I must say that I have asked the West
Riding authorities, as I have asked all local authorities, to submit to me comprehensive programmes for education during the next three years, and I am not prepared to direct their attention particularly to one part of their responsibility, as I am quite sure that the programmes that I shall receive will take into account all those things.

Mr. PALING: Is it not a fact that the supervision now merely consists in going to get a knowledge of these children and recording it, and that nothing else is done? If the supervision is going to be of that character in the future, of what use is it?

Oral Answers to Questions — BRITISH ARMY.

LONG SERVICE PENSIONS.

Major HORE-BELISHA: 67.
asked the Secretary of State for War whether, seeing that a sailor long-service pensioner receives 5d. a day addition to his pension at the age of 55 and 4d. a day at the age of 65 and if the pensioner joins the Royal Fleet Reserve and does a certain number of drills he gets 5d. at the age of 50 and 4d. at the age of 60, he can see his way to institute a similar system in the Army, especially as such a method has the advantage of keeping in touch with the service and preserves their physique and efficiency?

The FINANCIAL SECRETARY to the WAR OFFICE (Captain Douglas King): No, Sir.

ROYAL ARMY MEDICAL CORPS.

Lieut.-Colonel HENEAGE: 68.
asked the Secretary of State for War what is the shortage in Royal Army Medical Corps officers in the Army; how many civilian doctors are employed instead; and what is the extra cost, if any, to the Exchequer?

Captain KING: The shortage of Royal Army Medical Corps officers is 86. Of these 30 would be under instruction at the Royal Army Medical College and elsewhere, leaving a shortage of 56 officers doing duty, which is made up by employing 21 non-regular officers and 35 civilian practitioners. No extra cost to the Exchequer is involved.

Oral Answers to Questions — ASCOT RACES (POLICE)

Colonel DAY: 70.
asked the Secretary of State for the Home Department how many officers and men of the Metropolitan police force were engaged at Ascot for the race meeting, and what was the cost, also from what source the expenses of the police was paid; and whether the whole or part of the expenditure falls to be paid from the police rate of the London and other local authorities in the Metropolitan police area?

Mr. LOCKER-LAMPSON: The number of police varied from day to day, the maximum being 605, apart from those engaged in regulating traffic on roads within the Metropolitan police district. The cost was approximately £3,800, and was almost wholly borne by the various race course authorities.

Mr. W. THORNE: Were these extra police doing extra duty or ordinary duty? Was it overtime?

Mr. LOCKER-LAMPSON: I think it was in ordinary time, but they were paid by the various race course authorities who wanted their services.

Oral Answers to Questions — SUMMARY PROSECUTIONS (POLICE PROCEEDINGS).

Mr. OLIVER: 72.
asked the Home Secretary whether his attention has been called to the practice of the police in initiating proceedings in courts of summary jurisdiction at the relation of the private individuals whose interests are involved; and whether he will consider, in connection with the Criminal Justice Bill, the advisability of limiting the powers of police officers in this regard to cases of official prosecutions?

Mr. LOCKER-LAMPSON: I am not aware of any sufficient grounds for initiating legislation in the sense indicated.

Mr. OLIVER: Will the hon. Member accept representations to show that information have been laid by police superintendents on information from interested parties, that on occasions the prosecution is ultimately found to be one of a nature which would give rise to an action for malicious prosecution, but that by reason of the information having been preferred
in the name of the police the party charged with the offence is barred from his remedy against the real prosecutor?

Mr. LOCKER-LAMPSON: I shall be glad to receive representations on the subject.

Oral Answers to Questions — TRANSPORT.

OMNIBUS LICENCES.

Major CRAWFURD: 73.
asked the Home Secretary if he will supply figures showing the number of new licences issued each month of 1924 and 1925 to

RETURN showing the Number of NEW LICENCES for OMNIBUSES issued during 1924, and from January to May. 1925, to the undermentioned operating authorities.


Operating Authority.
1924.
1925.



Jan.
Feb.
Mar.
April.
May.
June.
July.
Aug.
Sept.
Oct.
Nov.
Dec.
Total.
Jan.
Feb.
Mar.
April.
May.
Total.


L.G.O. Co
119
57
60
68
74
40
98
39
57
15
8
—
635
16
7
21
25
20
89


Tillings
6
12
23
9
12
9
9
6
5
—
—
—
91
—
—
—
—
—
—


South Met. (Southern)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—


Met. Electric T'ways. (Metropolitan).
1
—
—
—
—
—
—
—
—
—
—
—
1
—
—
—
—
—
—


British (B.A.T.)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—


National
5
4
—
1
1
—
—
3
—
—
2
—
16
—
1
—
—
1
2


East Surrey
1
2
3
—
8
15
6
—
—
—
1
—
36
—
—
—
2
7
9


Thames Valley
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—


Other firms
19
9
25
26
32
22
21
19
31
35
26
17
282
25
24
14
38
7
108

RETURN of Omnibus Licences issued to the undermentioned Operating Authorities, during the months of January, 1924 and January, 1925.


Operating Authority.
January, 1924.
January, 1925.


L.G.O. Co
…
…
391
355


Tillings
…
…
20
29


South Metropolitan (Southern)
…
…
—
—


Met. Electric Tramways (Metropolitan)
11
17


British (B.A.T.)
…
…
3
3


National
…
…
9
9


East Surrey
…
…
10
9


Thames Valley
…
…
—
—


Other firms
…
…
24
53

DISTRICT RAILWAY (CLOSING OF DOORS).

Mr. W. THORNE: 79.
asked the Minister of Transport if he has been notified that on Monday night, the 15th instant, a man fell out of a train on to the line at Farringdon Street Station,

omnibuses owned by the London General Omnibus Company, Tillings, Southern, South Metropolitan Tramways, Metropolitan, Metropolitan Electric Tramways, British, B.A.T., National, East Surrey Traction Company, Thames Valley Traction Company and other firms, and the total number of licences issued to each of the above firms in January, 1924, and January, 1925?

Mr. LOCKER-LAMPSON: With the hon. Member's permission, I propose to circulate the figures in the OFFICIAL REPORT.

The figures are as follow:

and was seriously injured; if he is aware that, in consequence of the shortage of gatemen on the District Railway trains, many of the carriage doors are not closed, which is a danger to the travelling public; and if he will inquire into this matter?

Lieut.-Colonel MOORE-BRABAZON: As regards the first part of this question, the accident referred to occurred on a train belonging to the Metropolitan Railway Company, with whom I am in correspondence on the matter. As regards the second point, I am informed by the Metropolitan District Railway Company that the recent transfer of certain duties from the train staff to the platform staff has led to the doors of the cars being closed more regularly than before, and that no accidents have occurred which could be attributed to this change of practice

Mr. THORNE: Is the hon. and gallant Gentleman aware—which can be demonstrated by most Members who travel over this line either east or west—that the major part of the carriage doors are often left open? Is he aware that this morning when I was travelling on that line nearly all the doors were open the whole time on both sides of the carriage?

Sir H. BRITTAIN: May I ask why the hon. Gentleman did not shut them?

Mr. THORNE: Is the hon. Gentleman aware that when doors are left open it would be dangerous to passengers to shut them when the trains are in motion, and, further, in consequence of his observations, is he aware that it is not the duty of passengers to close doors?

Lieut.-Colonel MOORE-BRABAZON: On the question of trains running with the doors open, the matter will be carefully considered to see that no danger arises.

Sir JAMES REMNANT: What has the Ministry of Transport got to do with the doors of these trains?

Lieut.-Colonel MOORE-BRABAZON: They are responsible for the regulation of railway companies from the point of view of the safety of the public.

Mr. THOMAS: Is it not true that no railway company is allowed to run a train until the doors are closed?

Mr. W. THORNE: Is not the cause of the doors being left open that the railway company have taken the doormen off the trains?

LOWER THAMES TUNNEL.

Rear-Admiral SUETER: 80 and 81.
asked the Minister of Transport
(1) whether he can state what progress has been made with the proposal to construct a tunnel under the River Thames between Dartford and Purfleet; and whether he is now in a position to supply, as promised by the former Minister of Transport, the Committee which is advocating a tunnel in the Lower Thames with a copy of the engineers' plans and reports on the whole subject of these Lower Thames tunnels;
(2) whether he is in a position to give approximately the number of men that would be employed in constructing a tunnel in the Lower Thames, and the time it would take to complete the work; and whether, in view of the transport congestion in London and the large increase in the number of unemployed, he can obtain Cabinet approval forthwith for the construction of this work, review the financial aspect of the proposal with the authorities concerned, and commence the construction of this tunnel at the earliest possible date?

Lieut.-Colonel MOORE-BRABAZON: The matter has been under consideration by the London Traffic Advisory Committee, who have made an inspection of the site proposed for the tunnel. I am informed that the Committee, whilst they consider the scheme a desirable one, take the view that on traffic grounds other important schemes which they now have under consideration should take priority. Detailed consideration of the financial aspects of the proposal have therefore been postponed, and I am not in a position to give the information asked for in the questions. I may point out that in any case it would be necessary to obtain a special Act of Parliament before the proposal could be proceeded with.

Oral Answers to Questions — ARGENTINE (GOLD EXPORTS).

Sir F. WISE: 75.
asked the Chancellor of the Exchequer if the Argentine Government has issued a decree permitting the exportation of gold to be effective from 10th June, and, if so, if this applies to all the gold held by the Argentine Government?

The FINANCIAL SECRETARY to the TREASURY (Mr. Guinness): I understand that the decree of the 12th May permitting the exportation of gold from Argentina from the 10th June only affects gold in private hands.

Oral Answers to Questions — BEER (DOMESTIC BREWING).

Sir ARTHUR CHURCHMAN: 76.
asked the Chancellor of the Exchequer whether he is aware that a farm labourer, who is also a householder, may brew beer from two bushels of malt without paying a licence fee, and whether he is prepared to extend this privilege to farm labourers who are lodgers?

Mr. GUINNESS: A farm labourer or any other person who occupies a house of an annual value of £8 or less may, in any year, brew a quantity not exceeding four bushels of malt or the equivalent thereof for his own use without payment of duty. The Government are not prepared to extend this privilege to lodgers as suggested in the second part of the question.

Sir A. CHURCHMAN: Will the right hon. Gentleman be prepared to consider the question further if I put other information before him?

Mr. GUINNESS: I will gladly consider any information which the hon. Member may bring to my notice, but I would remind him that his question is not limited to agricultural labourers but to all householders with a small valuation. The effect of his proposal would be a very great widening of the scope of the concession given, and would lead to very great loss of revenue.

Viscountess ASTOR: Considering that we are spending £6,000,000 a week on drink in this country, and £40,000,000 a year more than we did before the War, will the Prime Minister watch very carefully that nothing is done to increase the consumption of beer?

Mr. SPEAKER: That is rather a large question arising out of this little one.

Oral Answers to Questions — INTER-ALLIED DEBTS.

Colonel WOODCOCK: 77.
asked the Chancellor of the Exchequer what is the amount of the half-yearly interest amortisation payments of the following five nations: Great Britain, Poland, Finland, Lithuania, and Hungary, who funded their debts to the United States?

Mr. GUINNESS: As the answer contains numerous figures I will, with the hon. and gallant Member's permission, circulate it in the OFFICIAL REPORT.

Following is the answer:

The payments to be made by Great Britain to the United States Government in the year 1925 are as follows:


—
Interest.
Amortisation of Principle.
Total.



$
$
$


—
136,620,000
24,000,000
160,620,000

I have no official knowledge of the amounts due from other countries, but I believe them to be approximately as follows:



$
$
$


Poland
5,310,750
950,000
6,260,750


Finland
267,300
47,000
314,300


Lithuania
180,450
30,000
210,450


Hungary
57,882
9,800
67,682

There is no half-yearly payment for amortisation, the sums given above being paid in one sum, in the case of Great Britain in December. The annual interest shown above is paid in two half-yearly sums, in June and December.

Oral Answers to Questions — TANGIER (NEUTRAL ZONE).

Major HORE-BELISHA: 52.
(for Lieut.-Commander KENWORTHY) asked the Secretary of State for Foreign Affairs whether his attention has been called to the recent violation of the central zone of Tangier by Spanish forces, and particularly by natives serving in the Spanish Army; and whether he has made any protest, or proposes to make any protest, independently or in conjunction with the other Powers interested in the neutrality of the Tangier zone, against these violations?

Mr. SAMUEL: I would refer the hon. and gallant Member to the answer given on the 15th June to the hon. Member for Brightside.

Oral Answers to Questions — MALTA LEGISLATIVE ASSEMBLY.

SIR GERALD STRICKLAND, M.P.

The following question stood on the Order Paper in the name of MR. GRIFFITHS.

28. To ask the Secretary of State for the Colonies whether he has taken or proposes to take any action with regard to the
Resolution he has received from the Legislative Assembly of Malta referring to the hon. Member for Lancaster" (Sir G. Strickland).

Sir G. STRICKLAND: On a point of Order. Before this question is put, may I beg leave to state to you, Mr. Speaker, that the question refers to a document which contains libellous statements against myself, which has been circulated to every Member of this House, and which has been submitted officially to you? I was informed that you would take no action thereon, and by this decision I was exempted from the duty of asking to be allowed to make a personal explanation. But, now that this document is referred to in a question as the basis thereof, I submit that I am entitled to ask you what is the procedure that I should follow for offering a contradiction, and making a personal explanation before any action is taken thereon, and that a document not before the House should not be dealt with by my right hon. Friend in any way, so long as I am unheard thereon?

Mr. SPEAKER: At the end of questions is the proper time for an hon. Member who desires to make a personal explanation.

Later—

Sir G. STRICKLAND: I beg leave to make a personal statement, and will do so as briefly as possible. I will refrain from quoting each paragraph of the document I have here. It has been sent as propaganda to every Member of this House, without a copy of the speech which it denounces as unconstitutional. The' circulation of this document to each Member of this House compels this explanation, because the hon. Member for Pontypool (Mr. Griffiths) has made reference thereto in a question on the Paper, as if it deserved full credence without the other side being first heard. It would not have been proper or respectful to this House to sit silent when a document so circulated is made the basis of a question on the Notice Paper. The first paragraph of the document alleges that I have unduly asked for the interference of this House with reference to matters which are within the exclusive province of the Parliament of Malta. In that Parliament, the Speaker stops anyone who refers to reserved subjects,
and you, Sir, did me the honour to make me mindful of my duty in refraining in this Parliament from referring to matters that are not reserved to the Imperial Parliament. But if the matters which are reserved to this Parliament are not to be referred to in this Parliament, then freedom of speech in this House is assailed if any weight be given to this document.
You, Sir, were most careful in restraining me from any aberration from the narrow limits of duty, on the occasion of my speech on 18th May, and I as carefully refrained from disobeying the ruling which you alone are competent to give. The second paragraph of this document insinuates that I obtained leave from the Malta Parliament on the plea of urgent private family affairs, and that those private family affairs do not exist. The nature of those urgent private affairs was by me communicated to the Speaker of the Parliament of Malta, and was accepted by him as sufficient and conclusive. I beg leave to assure you that those private affairs continue to-day as fully urgent as when I left Malta. It is further alleged that I have suggested that the Maltese Government is a pro-Italian Government, and that I have done so without any justification.

Mr. SPEAKER: I must point out to the hon. Member that he is entitled to make an explanation in this House only on a matter which relates to his position here. He must not use this opportunity for dealing with matters that concern another Parliament and Government.

Sir G. STRICKLAND: I gratefully avail myself of your permission to restrict my remarks in that way. I am accused of persistently endeavouring in this House and elsewhere to create friction and dissatisfaction between the Maltese and the British nation. If anything is notorious, it is that the contrary is the fact. I have never lost an opportunity of upholding the rights of the Maltese and the position of equality and mutual friendship that should exist between English and Maltese as citizens of the Empire and subjects of the King, and I have always been eager to acknowledge and to be proud of the land of my birth and of my mother's race. Nor have I claimed ascendency upon the fact that one of my race sat in the first separate House of Commons for the County of
Westmorland from the same home, and that I am the seventh of my name to sit in this House for a Northern constituency. I have always upheld in Malta respect of the law by all and fair treatment of all. To benefit my native land has been the main object and principal aim of the work of my life. To accuse me of the contrary is a gross calumny. This document goes further, and purports to request the Secretary of State for the Colonies to send this Resolution to you. You decided to take no notice of it. The Resolution also asks that it be sent to His Majesty the King. I consider that such a suggestion is for the purpose of pro-Italian political propaganda, and constitutes an undue importation of His Majesty's name in order to influence opinions by having to acknowledge them.

Mr. SPEAKER: The hon. Member is now criticising a Resolution passed by another Parliament of the Empire. It is impossible to allow that here. With regard to his reference to myself, I sent a polite acknowledgment of the document which reached me from the Speaker of another House, which I would always do. There the matter ended as far as I am concerned. The hon. Member can make now only a personal explanation on a matter which he thinks deals with his honour as a Member of this House.

Sir G. STRICKLAND: I consider that that honour is affected, not by the House of Parliament in Malta, but by the Prime Minister and Government of Malta, who caused this document to be circulated to every member of this House.

Mr. SPEAKER: The hon. Member must please not go into that here.

Sir G. STRICKLAND: My claim is, in the words of the Ninth Article of the Bill of Rights, which declares:
That the freedom of speech and Debates on proceedings in Parliament ought not to be impeached or questioned in any Court or place out of Parliament.
It was in the exercise of that freedom of speech that I made my statement on 18th May. My speech strictly referred to the responsibilities and functions of Government reserved to this Parliament. I feel that I have a duty to protect, not only my own rights, but the rights of every Member of this House in regard to freedom of speech on similar occasions,
and I may be excused for feeling strongly upon the duty to protect that freedom of speech in this House, in so much as it was a Member of Parliament for Westmorland of my name, according to constitutional history, who met with expulsion from this same House of Commons by order of Queen Elizabeth for exercising his freedom of speech when Queen Elizabeth claimed to be the Head of the Church.

Oral Answers to Questions — WIRELESS TELEGRAPHY (EXPLANATION) BILL,

"to explain the meaning of the expressions 'transmission' and 'rent or royalty' where used in certain provisions of the Wireless Telegraphy Act, 1904," presented by Sir WILLIAM MITCHELL-THOMSON; supported by Viscount Wolmer; to be read a Second time upon Monday next, and to be printed. [Bill 199.]

MESSAGE FROM THE LORDS.

That they have agreed to,

Kilmarnock Gas and Water Provisional Order Bill, without Amendment.

Amendments to

North Metropolitan Electric Power Supply Company Bill [Lords], without Amendment.

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE C.

Mr. WILLIAM NICHOLSON reported from the Committee of Selection; That they had discharged the following Member from Standing Committee C (added in respect of the Improvement of Land Act (1899) Amendment Bill): Major Yerburgh; and had appointed in substitution: Lieut.-Colonel Heneage.

Mr. WILLIAM NICHOLSON further reported from the Committee; That they had discharged the following Member from Standing Committee C (added in respect of the Dramatic and Musical Performers' Protection Bill and the Advertisements Regulation Bill [Lords]): Mr. Ernest Alexander; and had appointed in substitution: Sir Alfred Butt.

Reports to lie upon the Table.

Orders of the Day — FINANCE BILL

Mr. SNOWDEN: Perhaps it would be for the convenience of the House if Mr. Speaker would indicate what Motions on the Paper in reference to the Finance Bill he proposes to take to-day and to-morrow.

Mr. SPEAKER: I have had the advantage this morning of a consultation with representatives of the different parties in the House, and I find that the number of new Clauses is 12 or 13, which are submitted to me for selection, and it seems to me to be possible, with the help of the House, to attend to them in a reasonable time. But this will involve hon. Members endeavouring to help me in the matter, if I am to be able to collect-all those points. There are two which involve large principles. One is the first Amendment of the Government and the other is the Amendment of the hon. Member for the Exchange Division of Liverpool (Sir L. Scott) and the right hon. Member for Carmarthen (Sir A. Mond). They are, perhaps, major points and I would suggest that those major points each deserve about an hour or, perhaps, a iittle more. Some of the minor points may be disposed of in less time, perhaps in less than half an hour. I shall endeavour to find time for all those points.

Captain W. BENN: Inasmuch as the Government have themselves introduced three New Clauses of considerable importance, and inasmuch as a new Schedule appears for the first time, would not the Government consider the desirability of extending the time for the Report stage, in order that consideration may be given to the Schedule and to the new Amendments which are being moved by the Government themselves?

The PRIME MINISTER (Mr. Baldwin): If by "extending the time," the hon. and gallant Gentleman means another day, that is clearly out of the question. Two days have been allotted to the Report stage and that is more than ample time, in view of the discussions which have already taken place, for the new matter which has been introduced on the Paper.

Captain BENN: Does not the right hon. Gentleman realise that the new Schedule, being at the end of the Bill, must be taken at a very inconvenient hour?

The PRIME MINISTER: I hope not.

Sir CLEMENT KINLOCH-COOKE: There is on the Paper an Amendment in my name and that of other hon. Members. Will you kindly say whether it is proposed to take that Amendment, in which case, of course, I shall comply with your ruling in regard to time?

Mr. SPEAKER: The hon. Member's new Clause is one of those which I hope to be able to select. It was mentioned to me by the Chairman of Ways and Means.

Bill, as amended, considered.

NEW CLAUSE.—(Non-resident persons not to be chargeable to Income Tax in name of certain agents.)

(1) Where sales or transactions are carried out on behalf of a non-resident person through a broker in the ordinary course of his business as such, and the broker satisfies the conditions required to be satisfied for the purposes of this Section, then, notwithstanding that the broker is a person who acts regularly for the non-resident person as such broker the non-resident person shall not be chargeable to Income Tax in the name of that broker in respect of profits or gains arising from those sales or transactions.

(2) The conditions required to be satisfied for the purposes of this Section are that the broker must be a person carrying on bonâ fide the business of a broker in Great Britain or Northern Ireland, and that he must receive in respect of the business of the nonresident person which is transacted through him remuneration at a rate not less than that customary in the class of business in question.

(3) In this Section the expression "broker" includes a general commission agent.

(4) Rule 10 of the General Rules shall have effect subject to the provisions of this Section.—[Mr. Guinness.]

Brought up, and read the First time.

The FINANCIAL SECRETARY to the TREASURY (Mr. Guinness): I beg to move, "That the Clause be read a Second time."
This Clause is designed to deal with a great difficulty which has arisen owing to brokers and general commission agents having been held liable under recent legal decisions to pay Income Tax on the profits arising to non-residents on sales carried out in this country. The trouble
has arisen especially in the case of those commission agents who deal with produce and raw material when, though the transactions are carried out by men classed as commission agents or brokers, their relation with the non-resident principals is such as to make them, under the existing law, liable to Income Tax on the sales profit in this country accruing to their principals.
We propose to deal with this situation by excluding cases where the transaction is carried out on behalf of a nonresident person through a broker in the ordinary course of his business as such, provided that the broker receives in respect of the business remuneration at a rate not less than that customary in the class of business in question, and notwithstanding the fact that the broker may be acting regularly for the non-resident person as such. Where the agent acts exclusively for the particular non-resident principal he will, of course, remain liable for the Income Tax of that principal, and I believe that the law, as we propose to make it, will be in accordance with the intention expressed by Parliament when on the recommendation of Mr. McKenna they last dealt with this subject. Mr. McKenna took steps to exempt the entrepôt and international trade from any liability to British Income Tax on account of the profits of the foreign principal, but, in practice, since certain decisions have been given in the Courts, this class of entrepôt trade has been brought into the net, because this is a type of business in which the commission agent really does not know the ultimate destination of the goods. He only knows to whom he sells the goods, but he has not any evidence as to whether the broker to whom he sells is acting for a foreign principal or for someone in this country.
Naturally in the ordinary course of trade this information is very jealously guarded. The position has now arisen that a large number of these brokers and general commission agents live in fear of being charged on such of the profits of the foreign produce merchants as are notionally attributable to this market, although it is quite beyond their power to get their foreign principals to make any contribution to the tax for which the broker is now held liable. This tax at
the present time is in fact not generally collected but unless the law can be amended to deal with this difficulty, it will be the duty of the Inland Revenue to raise many assessments. If that course becomes necessary there is the danger of disastrous results to our vast international and entrepôt trade. Much of the business which is carried on in this country is concerned with goods which never reach these shores at all. Java sugar is sold through the London market to Indian merchants, and Scandinavian timber is sold through the London timber brokers to merchants in Holland and Belgium. Not even the world-wide reputation which the London broker has built up will enable him to keep this trade if the foreign seller discovers that by using the London broker he lays himself open to a charge for Income Tax which he can escape by dealing directly with the ultimate consumer.
If we make this amendment of the law I believe it will result eventually in a considerable profit to the revenue. At the present time the general commission agent is not generally brought into charge, and therefore we shall be losing nothing which is at present collected. Attempts to deal with this matter have revealed such difficulties that the Inland Revenue have found it impossible, short of causing a cataclysmic disturbance, in our existing trade methods, to raise assessments on this particular class of business. But if Parliament does not put the matter right the Inland Revenue will inevitably try to get this money and in doing that we shall drive a vast amount of this business, which is now going through London, into foreign channels, and we shall lose the taxes which we now collect on the profits made by the broker. The amount of income which would escape under the proposed Amendment is not very serious because Parliament in legislation in 1918 provided that it should only be that amount of the foreigner's profit which was notionally attributable to his selling profit in this market which should be charged, and that he should not be liable for the manufacturing or producing profit which arose in his own country.
Therefore the amount which might conceivably escape is only the difference between the c.i.f. price, approximately speaking, and the f.o.b. price when the charges for shipping, insurance and so
forth have been deducted. It is therefore only a small amount of the foreigners' profit which is really at issue, and on the other hand we have this vast income earned by the brokers and the general commission agents which we might easily lose if the Inland Revenue began to assess them on this business which has so far been held to be exempt. The position is now that the present system, exempting international and entrepôt trade, has in practice proved unworkable, and I hope that the House will settle the difficulty by accepting this New Clause and avoiding the necessity of raising a tax on all this new field of taxation with the result of driving away the great business which is now done in the London market in agency, brokerage, finance and shipping.

4.0 P.M.

Mr. WILLIAM GRAHAM: The Financial Secretary to the Treasury this afternoon has given a brief explanation of an important and complicated matter which was discussed at some length last year during the time we were in office, and at a time when very strong representations were made to us that there was a substantial hardship behind the effort to get some revenue from two classes of agents, who, theoretically at least, were outside the scope of British Income Tax. The difficulty of arguing a matter of this kind, first of all, is that it is very complex in character, and, secondly, the proposal of the Government appears on the surface of it to be fair and reasonable. But when we get down to the details of the case, I think I shall be able to show the House, briefly and as clearly as possible, that there is another side, and, as I regard it, a very dangerous side to this Clause. This goes back, of course, a long way in our Income Tax history, probably at least to 1842, but I do not propose to review anything like that period this afternoon. The short and simple position, as we found it prior to 1915, was that the man who was a special agent in this country—that is in a definite sense a. resident agent—was undoubtedly taxed, and the two classes who were outside the scope of any tax at all in respect of the foreign principal were the commission agent, whom I will call the man with the roving commission, and the broker. That was the position in 1915, so we can distinguish to-day three classes of agency: one which was undoubtedly liable to Income Tax on the profits which were made on behalf of
the foreign principal and the other two who were not liable at all.
In 1915, Mr. McKenna introduced a Clause in this House mainly, I think, for two reasons. The first reason was that there had undoubtedly grown up some kind of collusive arrangement, under which these two classes of people were really acting as special agents and conducting what amounted in practice to a branch of the business in this country. In order to try and get at this form of collusion, Mr. McKenna introduced some proposals in 1915 which undeniably are the ground of our difficulty this afternoon. The other reason which, I think, actuated Mr. McKenna at the time was this. It appeared to be perfectly clear that there was being conducted under the two heads of agency which I have just described, and which so far were excluded from the tax, a class of business within this country which was in competition with taxed trades conducted here. You therefore had an unfair position as regards two classes of commerce, in that one was liable to the tax and the other trade in competition with it was not subject to the tax at all. That state of affairs was clearly indefensible, and, accordingly, mainly for the reason of collusion, this proposal was introduced in 1915.
I understand that the contention of the supporters of the present Clause is that that Clause of 1915 has been extended to cover classes of agency which were not intended by Mr. McKenna to be covered at all. I think it is very doubtful indeed whether that proposition could be supported. In any event, the next stage of this very important controversy—because I call anything important which covers millions of pounds worth of trade and may mean a great deal of revenue to Great Britain—was the consideration of this very problem by the Royal Commission on Income Tax in 1919. Far be it from me to suggest that everything published in that Report in 1920 is necessarily sacred and not to be departed from in any way, but I would remind the Chancellor of the Exchequer, because I think certain interests have got the upper hand of him in this matter, that on this point the Royal Commission was perfectly unanimous. First of all, they made it clear that they did not want to do anything at all to injure our entrepot trade—I do not admit that this does
injure that class of trade at all—but they also went on to show that there were great advantages in what was virtually a resident agency in this country, and they also clearly showed that it was unfair that any trade carried on by people within this country should be at a disadvantage compared with trade conducted on behalf of foreign principals which was nevertheless within these shores. Accordingly they unanimously made the recommendation that the existing law should be extended to cover the broker who was acting for all practical purposes as resident agent.
The Chancellor of the Exchequer now proposes the very opposite of that definite and unanimous recommendation, because, in effect, what he says is this: I propose to make certain of the exemption of the broker and the general commission agent, and I do not propose to try to levy this tax at all. That is the extraordinary position at which we have arrived following the unanimous recommendation of the Royal Commission. He maintains the taxation on the special agent—I ought to have made that clear—but he now departs from everything that has been attempted as regards the broker and the general agent contrary to the unanimous recommendation of the Royal Commission on Income Tax in 1920. I regard that as a very serious departure. I am the last to suggest any taxation which is going to injure our international trade, especially at a time when we have widespread unemployment and when undoubtedly it is our duty to foster trade as much as we possibly can: but the important point here is one of taxation and whether we are going to allow outside of tax trade which is competing with British trade. The Royal Commission in 1919 made that unanimous recommendation, and a year ago, during one of our all-night sittings on the Finance Bill of that Say, we discussed this matter at some length on the floor of this House. It can hardly be denied that this is trade in competition with taxed trade within this country.
I want to remind the House also that all the legal decisions within recent times have been on the side of the Inland Revenue in this matter. I challenge the Chancellor of the Exchequer, in the course of his reply this afternoon, to name one legal decision which supports the course
which he is now proposing to the House. The legal decisions support the Inland Revenue authorities, and, accordingly, the Government cannot come forward and say that they are in any difficulty at all as regards the legal aspects of their case. What is the practical point in this connection? It is this. If we give up the agent, who is in my judgment in many cases really carrying on a branch of some foreign principal in this country, under it may be a general agency or broker's business, because it is very difficult to say where the one ends and the other begins, we have no recourse at all against the foreign principal. We have no jurisdiction over him. Accordingly, from the point of view of revenue, it is perfectly fair to try to keep a reasonable hold—I do not put it higher than that—over the agent in this country. That hold the Chancellor of the Exchequer entirely gives up by this proposal, and I venture to suggest that, while on the surface there is something to be said for what is an apparent unfairness, he is really embarking on a very dangerous step in Income Tax practice, because he is going to put certain classes of British trade conducted within these shores at a manifest disadvantage compared with this trade still coming within these shores but, under the new principles being laid down by the right hon. Gentleman, not open to taxation.
There is only one other point I would put in opposing this new Clause. It has been argued by some critics that this is really a problem of double taxation. A year ago, when this matter was under consideration by the House, I took the view that there was not a very large element of the difficulty of double taxation in it, but it may be that a solution could be found along that line. Within recent times we have taken definite steps in the matter of double taxation, particularly within our Empire in a case like shipping, and, if I remember rightly, in certain other directions. If you can get some kind of reciprocal arrangement, there might be a case and there might be a way out of this difficulty. But there is certainly no real merit, in taxation, in the proposal which the Chancellor of the Exchequer now makes. I understand that the difficulty is that in practice this revenue is very difficult to collect The Financial Secretary indeed made that plain this afternoon. But that never was an argument for giving up what is quite
clearly taxable material. When did the House of Commons ever agree to a proposition that you were to give up what could be legitimately taxed merely because there were difficulties, technical and other, in the collection? If the Chancellor of the Exchequer once makes a concession of that kind, a very large part of his revenue flies away. On all these grounds, I think that this is a bad proposal; I think the Government ought to have resisted it, as we resisted it in this House a year ago; and, accordingly, so far as we are concerned, we shall certainly divide against it this afternoon.

Mr. DENNIS HERBERT: I must pay the right hon. Member for Central Edinburgh (Mr. W. Graham) a compliment on his ingenuity in finding his way to oppose this particular Clause. After all, he has a great and intense interest in the entrepôt trade of this country, and it seems to me that he is attempting here, by means of the Income Tax, to levy a protective tax, instead of doing it by means of a tariff. He wants to tax profits which are made on work done abroad in order to protect those who do similar work in this country. If he wants to do that, his proper course is to come out with a definite proposal for a tariff against these foreign manufactured goods. I would like to thank the Financial Secretary to the Treasury, the Chancellor of the Exchequer, and the Government for the way in which they have met those who have been associated with me and who were associated with me last year when we thought that we had the sympathy of the right hon. Gentleman who has just spoken. Even if there were anything in the argument put forward by the right hon. Gentleman, I venture to suggest—and I think the Chancellor of the Exchequer will agree with me—that the amount of business which would be driven away through the fear of this particular taxation would lose this country far more revenue than would be gained by an attempt to follow the counsels of the right hon. Gentleman.
The right hon. Gentleman the Financial Secretary to the Treasury, in the course of his speech, said that we should lose, or run the danger of losing, the Income Tax on the brokers' profits which are made in this country in connection with the business, but that is a very small part
indeed of the revenue we are going to lose if that business is driven away from this country. Then, we not only lose the tax on the profits of that business, but the City of London loses that immensely larger business connected with freights, insurance, and the financial business of various kinds which this brokerage business brings in its train. It is not too much to say that, to use the right hon. Gentleman's own word, the result would be cataclysmic. Therefore, the House must discount, even if there were any thing very much in it otherwise, any fear that possibly some profits might escape taxation which would otherwise have been taxed under the law as it now stands.
There are two points to which I should like to draw the attention of the Chancellor of the Exchequer and the Financial Secretary. To one the Financial Secretary himself referred when he stated that, in fact, this tax, in so far as it is objectionable, has not been collected by the Inland Revenue. Of course, that has not always been the case, but when the right hon. Gentleman sitting opposite was in office last year, there were cases in which the Inland Revenue, under his régime, did refrain from putting the law as it then stood into force quite so hardly as they might have done, and we recognise with gratitude that the Inland Revenue have adopted that course, and adopted it in the interests of the revenue of this country. I venture to express the hope that, if this Clause goes through, as I hope it will, the Government will see that no attempt is made by the Inland Revenue to put in force, in regard to the past, the letter of the law as it stood in the past.
The other point is this: The Clause is, I believe, perfectly satisfactory to something like 90 per cent., if not more, of those whom the Government have been trying to meet, and I only venture to express the hope that, if there be 1, 5, or even 10 per cent. who might possibly not be protected by this Clause, although it is the intention of the Government to protect them, the Inland Revenue, in the spirit in which this Clause is being brought forward, will interpret it as far as possible in the way in which it is meant to be interpreted, and that, should there be a case of hardship, they will endeavour so far as they can to act up to the spirit of the Clause rather than, possibly, to any
narrowness that there may be in the letter of it.
I would urge, in conclusion, that the really serious state of the law as it has stood in the past has been shown in practice during the last two years, as the Inland Revenue no doubt know, by the fact that a large amount of business has already been driven away from this country, and although it may be said that the tax which would be chargeable under the law as it now stands against some of these foreigners would be very small, that does not affect the threatened flight of business from this country, because if the foreigner sees that, with very little additional inconvenience, he can do his business elsewhere just as well, and profitably, and easily as he can in London, the smallest tax frightens him, because he thinks that if he is liable to tax at all, he cannot tell how much it will be in the future, and, therefore, he will go elsewhere with his business. We are very grateful to the Government for meeting us in this way, and we trust that they will stick to this Clause, and that the common sense of the House, in the interests of the taxation of this country, will support the Government.

Captain BENN: Many of us listened with delight to the hon. Member for Watford (Mr. Herbert), to hear that so much consideration is being shown to this foreign trade. This is a new red light, but it is not quite as bright as it appears when one examines it, because the hon. Member objects to taxing the profits of a merchant, but we object to laying on a tax which will be passed on to the consumer. The hon. Member is prepared to support a tariff which the merchant will pass on to the consumer, but he is not prepared to support a tax which the merchant will pay himself.

Mr. HERBERT: Will the hon. and gallant Member say why he cannot pass on the Income Tax if he can pass on a tariff?

Captain BENN: That, I think, would lead us rather further than the narrow limits of this Clause would allow, but it is very interesting to note, and I take leave to draw attention to, the distinction which the hon. Gentleman makes in opposing a tax imposed on a merchant
and in supporting a tax passed on to the consumer. That comment was aroused by the interest excited by the hon. Member's able but somewhat surprising speech. I wish to ask a question which has been put to me by people interested in this Clause. I wish to ask how the Commissioners propose to find out when remuneration is "at a rate not less than that customary" in this class of business. I ask that, because some people fear that the application of this Clause will lead to methods, on the part of the Inland Revenue authorities, of an inquisitorial character, and if the right hon. Gentleman will tell us how, in his plans, he is proposing to deal with the determination of the question of what is the remuneration, I think it might set at rest doubts that are felt by many interested in the Clause.

Mr. GUINNESS: The exemption applies to agents who are paid commission agents, and not salaried agents.

Captain BENN: That is not quite the point. Are they to return their total receipts from their firms, and their total business done, or how will you ascertain that they are not paid more than the customary rate, even assuming that you know what the customary rate is?

Sir WILLIAM LANE-MITCHELL: The customary brokerage rate is well known, but if a large shipper here engaged a broker or commission agent to do his business for ⅛ per cent., when the regular commission was ½ per cent., it would be perfectly easy for the Income Tax authorities to check whether the full commission was being charged or not. I am glad the Government have brought in this Clause, as I happen to be a broker, and it is very interesting to me to know that, when you are accepting business from abroad, at least you cannot cut the commission. You must charge the full commission, or the Inland Revenue authorities will come down on you. If you were a produce agent dealing with goods all over the world, you would know how much waste of time there is in trying to get clear from the Income Tax liability in respect of the profits of your shipper abroad on these transactions. The hon. and gallant Member for Leith (Captain Benn) suggested that the Government were protect-
ing the merchant. They are not protecting the merchant, but the produce broker and the commission agent on this side, who are now liable to Income Tax, and have no means of recovering it from the shippers abroad, on the profits they may make on these goods. This affects goods from every part of the world. I am offered every morning goods from China to go to any port in Europe, and you do not know where they are going. The Inland Revenue authorities say the agent is responsible because he handles the goods, but he does not know whether

they are going to Hamburg or Marseilles or anywhere else. It is a responsibility we ought not to have to bear, and the agents and brokers in the City of London are grateful to the Government for making this concession, which relieves us of these liabilities, which we ought not to be asked to bear.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 262; Noes, 68.

Division No. 192.]
AYES.
[4.25 p.m.


Acland-Troyte, Lieut.-Colonel
Collins, Sir Godfrey (Greenock)
Hennessy, Major J. R. G.


Agg-Gardner, Rt. Hon. Sir James T.
Cooper, A. Duff
Henniker-Hughan, Vice-Adm. Sir A.


Albery, Irving James
Cope, Major William
Herbert, Dennis (Hertford, Watford)


Amery, Rt. Hon. Leopold C. M. S.
Couper, J. B.
Herbert, S. (York, N. R., Scar. & Wh'by)


Applin, Colonel R. V. K.
Courtauld, Major J. S.
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Craik, Rt. Hon. Sir Henry
Hogg, Rt. Hon. Sir D. (St. Marylebone)


Astor, Viscountess
Crawfurd, H. E.
Holbrook, Sir Arthur Richard


Atholl, Duchess of
Croft, Brigadier-General Sir H.
Homan, C. W. J.


Baldwin, Rt. Hon. Stanley
Crook, C. W.
Hope, Sir Harry (Forfar)


Balfour, George (Hampstead)
Crooke, J. Smedley (Deritend)
Hopkins, J. W. W.


Balniel, Lord
Crookshank, Col. C. de W. (Berwick)
Hopkinson, A. (Lancaster, Mossley)


Barclay-Harvey, C. M.
Crookshank, Cpt. H. (Lindsey, Gainsbro)
Hore-Belisha, Leslie


Barnett, Major Richard
Curzon, Captain Viscount
Howard, Capt. Hon. D. (Cumb., N.)


Beamish, Captain T. P. H.
Dalkeith, Earl of
Hudson, Capt. A. U. M. (Hackney, N.)


Beckett, Sir Gervase (Leeds, N.)
Davies, Maj. Geo. F. (Somerset, Yeovil)
Hudson, R. S. (Cumberl'nd, Whiteh'n)


Bellairs, Commander Carlyon W.
Dawson, Sir Philip
Hume-Williams, Sir W. Ellis


Benn, Captain Wedgwood (Leith)
Dean, Arthur Wellesley
Hurd, Percy A.


Berry, Sir George
Dixon, Captain Rt. Hon. Herbert
Hutchison, G. A. Clark (Midl'n & P'bl's)


Betterton, Henry B.
Drewe, C.
Hutchison, Sir Robert (Montrose)


Blades, Sir George Rowland
Eden, Captain Anthony
Jackson, Lieut.-Colonel Hon. F. S.


Boothby, R. J. G.
Edmondson, Major A. J.
Jackson, Sir H. (Wandsworth, Cen'l)


Bourne, Captain Robert Croft
Edwards, John H. (Accrington)
Jacob, A. E.


Bowater, Sir T. Vansittart
Elliot, Captain Walter E.
James, Lieut.-Colonel Hon. Cuthbert


Bowyer, Capt. G. E. W.
Ellis, R. G.
Jephcott, A. R.


Boyd-Carpenter, Major A
Elveden, Viscount
Jones, G. W. H. (Stoke Newington)


Brass, Captain W.
England, Colonel A.
Kennedy, A. R. (Preston).


Brassey, Sir Leonard
Erskine, James Malcolm Monteith
Kindersley, Major Guy M.


Briscoe, Richard George
Erskine, Lord (Somerset, Weston-s.-M.)
Kinloch-Cooke, Sir Clement


Brittain, Sir Harry
Evans, Captain A. (Cardiff, South)
Lamb, J. Q.


Brocklebank, C. E. R.
Evans, Capt. Ernest (Welsh Univer.)
Lane-Fox, Lieut.-Col. George R.


Brooke, Brigadier-General C. R. I.
Fairfax, Captain J. G.
Lister, Cunliffe-, Rt. Hon. Sir Philip


Broun-Lindsay, Major H.
Falle, Sir Bertram G.
Locker-Lampson, G. (Wood Green)


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Fanshawe, Commander G. D.
Locker-Lampson, Com. O. (Handsw'th)


Buckingham, Sir H.
Fermoy, Lord
Loder, J. de V.


Bull, Rt. Hon. Sir William James
Fielden, E. B.
Lougher, L.


Bullock, Captain M.
Fleming, D. P.
Lowe, Sir Francis William


Burgoyne, Lieut.-Colonel Sir Alan
Ford, P. J.
Luce, Maj.-Gen. Sir Richard Harman


Burman, J. B.
Forestier-Walker, L.
Lumley, L. R.


Burton, Colonel H. W.
Foster, Sir Harry S.
Macdonald, Capt. P. D. (I. of W.)


Butler, Sir Geoffrey
Fremantle, Lieut.-Colonel Francis E.
McDonnell, Colonel Hon. Angus


Cadogan, Major Hon. Edward
Ganzoni, Sir John
Macintyre, I.


Caine, Gordon Hall
Gillett, George M.
McLean, Major A.


Campbell, E. T.
Gilmour, Lt.-Col. Rt. Hon. Sir John
Macnaghten, Hon, Sir Malcolm


Cautley, Sir Henry S.
Goff, Sir Park
Maitland, Sir Arthur D. Steel-


Cayzer, Sir C. (Chester, City)
Grenfell, Edward C. (City of London)
Makins, Brigadier-General E.


Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)
Grotrian, H. Brent
Malone, Major P. B.


Cazalet, Captain Victor A.
Guinness, Rt. Hon. Walter E.
Manningham-Buller, Sir Mervyn


Cecil, Rt. Hon. Sir Evelyn (Aston)
Gunston, Captain D. W.
Margesson, Captain D.


Chadwick, Sir Robert Burton
Hacking, Captain Douglas H.
Marriott, Sir J. A. R.


Chamberlain, Rt. Hn. J. A. (Birm., W.)
Hall, Capt. W. D'A. (Brecon & Rad.)
Meyer, Sir Frank


Chamberlain, Rt. Hon. N. (Ladywood)
Hamilton, Sir R. (Orkney & Shetland)
Milne, J. S. Wardlaw-


Charteris, Brigadier-General J.
Hannon, Patrick Joseph Henry
Mitchell, Sir W. Lane (Streatham)


Christie, J. A.
Harney, E. A.
Molas, Thomas


Churchill, Rt. Hon. Winston Spencer
Harrison, G. J. C.
Mond, Rt. Hon. Sir Alfred


Churchman, Sir Arthur C.
Harvey, G. (Lambeth, Kennington)
Monsell, Eyres, Com. Rt. Hon. B. M.


Clarry, Reginald George
Harvey, Major S. E. (Devon, Totnes)
Moore, Lieut.-Colonel T. C. R. (Ayr)


Cobb, Sir Cyril
Haslam, Henry C.
Moore-Brabazon, Lieut.-Col. J. T. C.


Cochrane, Commander Hon. A. D.
Hawke, John Anthony
Morrison, H. (Wilts, Sallsbury)


Cockerill, Brigadier-General G. K.
Headlam, Lieut.-Colonel C. M.
Morrison-Bell, Sir Arthur Clive


Cohen, Major J. Brunel
Henderson, Lieut.-Col. V. L. (Bootle)
Murchison, C. K.


Colfox, Major Wm. Phillips
Heneage, Lieut.-Col. Arthur P.
Nelson, Sir Frank


Newman, Sir R. H. S. D. L. (Exeter)
Sanderson, Sir Frank
Thomson, Sir W. Mitchell-(Croydon, S.)


Nuttall, Ellis
Sandon, Lord
Tinne, J. A.


Oakley, T.
Sassoon, Sir Philip Albert Gustave D.
Tryon, Rt. Hon. George Clement


O'Neill, Major Rt. Hon. Hugh
Savery, S. S.
Trevelyan, Rt. Hon. C. P.


Oman, Sir Charles William C.
Scott, Sir Leslie (Liverp'l, Exchange)
Vaughan-Morgan, Col. K. p.


Ormsby-Gore, Hon. William
Shaw, Lt.-Col. A. D. Mcl. (Renfrew, W)
Wallace, Captain D. E.


Pennefather, Sir John
Shaw, Capt. W. W. (Wilts, Westb'y)
Ward, Lt.-Col. A. L. (Kingston-on-Hull)


Penny, Frederick George
Sheffield, Sir Berkeley
Warner, Brigadier-General W. W.


Percy, Lord Eustace (Hastings)
Simms, Dr. John M. (Co. Down)
Warrender, Sir Victor


Peto, Basil E. (Devon, Barnstaple)
Skelton, A. N.
Wells, S. R.


Pilditch, Sir Philip
Smith, R. W. (Aberd'n & Kinc'dine, C.)
White, Lieut.-Colonel G. Dairymple


Pownall, Lieut.-Colonel Assheton
Smith-Carington, Neville W.
Williams, Com. C. (Devon, Torquay)


Preston, William
Smithers, Waldron
Williams, Herbert G. (Reading)


Price, Major C. W. M.
Somerville, A. A. (Windsor)
Windsor-Clive, Lieut.-Colonel George


Rawlinson, Rt. Hon. John Fredk. Peel
Spender Clay, Colonel H.
Winterton, Rt. Hon. Earl


Rawson, Alfred Cooper
Sprot, Sir Alexander
Wise, Sir Fredric


Remnant, Sir James
Stanley, Col. Hon. G.F. (Will'sden, E.)
Wolmer, Viscount


Rentoul, G. S.
Stanley, Lord (Fylde)
Wood, B. C. (Somerset, Bridgwater)


Rhys, Hon. C. A. U.
Stanley, Hon. O. F. G. (Westm'eland)
Wood, Rt. Hon. E. (York, W. R., Ripon)


Rice, Sir Frederick
Stott, Lieut.-Colonel W. H.
Wood, E. (Chest'r, Stalyb'ge & Hyde)


Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Strickland, Sir Gerald
Wood, Sir Kingsley (Woolwich, W.).


Roberts, Samuel (Hereford, Hereford)
Stuart, Crichton-, Lord C.
Wood, Sir S. Hill- (High Peak)


Ropner, Major L.
Stuart, Hon. J. (Moray and Nairn)
Woodcock, Colonel H. C.


Ruggles-Brise, Major E. A.
Sueter, Rear-Admiral Murray Fraser
Worthington-Evans, Rt. Hon. Sir L.


Russell, Alexander West (Tynemouth)
Sykes, Major-Gen. Sir Frederick H.
Young, E. Hilton (Norwich)


Rye, F. G.
Tasker, Major R. Inigo



Samuel, A. M. (Surrey, Farnham)
Thompson, Luke (Sunderland)
TELLERS FOR THE AYES.—


Sandeman, A. Stewart
Thomson, F. C. (Aberdeen, South)
Colonel Gibbs and Major Sir Harry




Barnston.


NOES.


Adamson, W. M. (Staff., Cannock)
John, William (Rhondda, West)
Smith, Ben (Bermondsey, Rotherhithe)


Ammon, Charles George
Johnston, Thomas (Dundee)
Smith, H. B. Lees (Keighley)


Attlee, Clement Richard
Jones, Morgan (Caerphilly)
Smith, Rennie (Penistone)


Beckett, John (Gateshead)
Jones, T. I. Mardy (Pontypridd)
Snell, Harry


Charleton, H. C.
Kelly, W. T.
Snowden, Rt. Hon. Philip


Cluse, W. S.
Kennedy, T.
Stamford, T. w.


Cove, W. G.
Kenyon, Barnet
Stephen, Campbell


Dalton, Hugh
Lansbury, George
Thorne, G. R. (Wolverhampton, E.)


Day, Colonel Harry
Livingstone, A. M.
Thorne, W. (West Ham, Plaistow)


Duncan, C.
MacLaren, Andrew
Thurtle, E.


Gosling, Harry
Maclean, Nell (Glasgow, Govan)
Trevelyan, Rt. Hon. C. P.


Graham, D. M. (Lanark, Hamilton)
March, S.
Viant, S. P.


Graham, Rt. Hon. Wm. (Edin., Cent.)
Maxton, James
Watts-Morgan, Lt.-Col. D. (Rhondda)


Grenfell, D. R. (Glamorgan)
Montague, Frederick
Westwood, J.


Griffiths, T. (Monmouth, Pontypool)
Morris, R. H.
Wheatley, Rt. Hon. J.


Hall, F. (York, W. R., Normanton)
Morrison, R. C. (Tottenham, N.)
Williams, David (Swansea, East)


Hall, G. H. (Merthyr Tydvil)
Naylor, T. E.
Williams, T. (York, Don Valley)


Hardie, George D.
Oliver, George Harold
Windsor, Walter


Hayes, John Henry
Paling, W.
Wright, W.


Henderson, Rt. Hon. A. (Burnley)
Pethick-Lawrence, F. W.
Young, Robert (Lancaster, Newton)


Hirst, G. H.
Ponsonby, Arthur



Hirst, W. (Bradford, South)
Potts, John S.
TELLERS FOR THE NOES.—


Hudson, J. H. (Huddersfield)
Scrymgeour, E.
Mr. T. Henderson and Mr. A.


Jenkins, W. (Glamorgan, Neath)
Shaw, Rt. Hon. Thomas (Preston)
Barnes.

Clause read a Second time, and added to the Bill.

Mr. SPEAKER: The Clause standing next on the Order Paper—(Payment out of the New Sinking Fund (1923) of accruing interest on war saving certificates and national savings certificates)—cannot be taken, because it would involve a charge upon the, Consolidated Fund.

Mr. LEES-SMITH: May I point out that the object of this Clause is to remove a charge from the Consolidated Fund, and put it on to the Sinking Fund?

Mr. SPEAKER: The Sinking Fund is part of the Consolidated Fund. These things have always been considered to need a Resolution.

Mr. LEES-SMITH: It does not involve an increased charge, but merely takes a certain sum of money from one part of the Consolidated Fund to another part of the Consolidated Fund.

Mr. SPEAKER: It is not a charge in the sense of a new tax. If the hon. Member will look up the previous cases, I think he will find that we always have had a Resolution.

NEW CLAUSE.—(Amendment of 10 and 11 Geo V, c. 18, s. 22.)

Section twenty-two of the Finance Act, 1920 (which provides for a deduction from assessable income in respect of dependent relatives), shall have effect as if for the words "twenty-five pounds" there were substituted the words "fifty pounds."—[Mr. Charleton.]

Brought up, and read the First time.

Mr. CHARLETON: I beg to move, "That the Clause be read a Second time."
I want to make an appeal to the benevolence of the Chancellor of the Exchequer on behalf of a very deserving class of the community—those people who just come within the lower range of the Income Tax, and who have, as many have, the misfortune to have children who are mentally defective or crippled, who will never earn anything themselves, and who are a constant worry to their parents to provide for them throughout their days, and also for them should they be left behind. There is also that class of person, school teachers and others, who have charge, sometimes, of afflicted brothers and sisters and other relatives. Those people have a big struggle, and at present they only get a little relief in the form of a deduction of £25. On both sides of the House we like to do things gradually. We do not believe in making any big changes, and, as these deductions have been in operation for three or four years, and seem to have worked all right, cannot the right hon. Gentleman see his way to give these people a little more relief?

Mr. MORGAN JONES: I beg to second the Motion.

The CHANCELLOR of the EXCHEQUER (Mr. Churchill): I am sorry I cannot meet the hon. Gentleman upon this point, because it would involve £700,000 in a full year, and in the present Budget we are already making a special feature of helping the small Income Tax payer. It is one of the greatest features of the remissions in the Budget. He gets the advantage of the 6d. on the flat rate and he also gets the benefit of the increased discrimination between earned and unearned income. The whole yield in a full year from the Silk Duties, roughly £7,000,000, we are going to hand over to the small Income Tax payers, and the relief is given in greater proportion to the tax as the scale is descended. Such a concession to a large class of Income Tax payers will result in exempting altogether some who used to pay last year while others will have their tax reduced by the equivalent of 2s. in the £ in the lower reaches, tapering away to about 10d. in the £ in the higher ranges.
The proposal in this new Clause was put forward last year, and failed to
receive anything from the right hon. Member for Colne Valley (Mr. Snowden), except that sympathy which, in common with other Chancellors, he would naturally show to a proposal of this kind. When a Clause similar to this was proposed last year during the Labour administration, on the advice and instigation of the right hon. Gentleman opposite, it was rejected by 180 to 80 votes. I have been able to go a great deal further in relieving this very class of Income Tax payers than was open to the right hon. Gentleman last year, when he was dealing with other aspects of the fiscal question—Tea, Sugar and Entertainments Duties. We have been able to go further in relieving the Income Tax payers than he was, and, in these circumstances, I am afraid I cannot at the present time take the step recommended, and must entrench myself behind the position taken up by the right hon. Gentleman opposite.

Captain BENN: I do not think the Chancellor's argument about last year's Budget has any weight at all. It is perfectly true amendments are moved by the Opposition, and whether or not they are to be recommended depends on the character of the Budget. The Chancellor of the Exchequer last year made enormous remissions in the way of indirect taxation to poor people, and to say that because he was not willing to give this concession, the present Chancellor of the Exchequer, who is doing nothing of the kind for the ordinary consumer, is fortified by the ex-Chancellor's view, does not seem to have any weight at all.

Mr. CHURCHILL: I am the inheritor of all his concessions. The whole process of Budget relief is cumulative.

Captain BENN: A small thing like this, which would only cost £700,000, is surely not an item at which the Chancellor of the Exchequer should boggle, Having given relief to richer classes running into millions and tens of millions. The point I want to make is that the right hon. Gentleman has greatly increased indirect taxation. He spoke of giving the whole produce of the Silk Duty to Income Tax payers, but I believe that when everything which comes under that duty is taxed it will produce very much more than the Budget estimate. It is a very great and increasing burden of indirect taxation. There are also other indirect taxes to pay. There is the Lace Duty,
which, I suppose, will amount to about £300,000, or at least £200,000. Furthermore, there is this peculiarity about this year's Budget. It is not complete. We have not yet got a proper survey of the relative amounts of direct and indirect taxation, because we may be faced with supplementary Bills increasing the burden of indirect taxation.

Mr. CHURCHILL: No.

Captain BENN: The right Gentleman cannot say no. He knows the Government are pledged to have this investigation, and to take the necessary steps. Therefore, in view of the fact that the burden of indirect taxation has been made heavier by the Chancellor of the Exchequer, and it will probably be largely increased before the end of the year, this Clause is one which certainly deserves much more sympathy and consideration than the right hon. Gentleman has given to it.

Mr. MACLEAN: As the hon. and gallant Gentleman has just said, the Chancellor of the Exchequer has made quite a number of concessions to other people, and it is not enough for him to say that, because the late Chancellor of the Exchequer made concessions, he is the inheritor of those concessions. If the present Chancellor of the Exchequer moves to a higher position in the Government, or the Government cease to exist as a Conservative Government next year, and others take their place, does he mean to say that that particular Chancellor, however much opposed to the concessions given by his predecessor, is the inheritor of those concessions? If so, he is carrying on a very bad inheritance indeed. The Chancellor has been all the time talking about balancing his Budget. I think he will go down to history as the Cinquevalli of the Exchequer, one of the most expert jugglers who has ever appeared in this House.
I am quite certain of this, that the right hon. Gentleman may be complimented upon the very careful, the very neat, and the very adroit way in which he has proceeded; he will not need a balancing pole to get to the end of the tight rope. But I would ask him to exercise a little charity in regard to these poor people whom this Amendment is asking him to consider. Last week he was appealed to
to do a certain thing by some of his own supporters. He gave a concession to the landlords of this country of £500,000. They did not appeal to his benevolence as my hon. Friend is now appealing to him. They merely put it to him! Then the Chancellor of the Exchequer immediately rose, and said: "Certainly, I have £500,000 stowed away ready for you, and you can have it." Here is a concession asked for for a poorer class of £700,000 as the Chancellor himself estimates. I have always noticed that when the Chancellor of the Exchequer estimates a concession that he does not intend to give that he estimates it as a greater sum than it actually is, but if he is going to give away something to some of his political friends and supporters he estimates the concession something less than it turns out to be when the result is made known.
This concession, I am certain, would not come to the sum the Chancellor has said. Even, however, though it did come to the £700,000 I would ask the right hon. Gentleman how many concessions has he made to the poorer classes of the community, or even to that smaller section of the working classes which pay on the lower rate of Income Tax and who just come within the Income Tax level? If the Chancellor can afford £500,000 for the landlords of this country, he can afford to give £700,000, even if this concession came to that sum. The object has been outlined by the hon. Member who moved the proposed new Clause. I hope the right hon. Member will take the matter into his reconsideration, and for the first time during the period of these Debates give at least one concession to those who have appealed to him from the outside. He may look upon the matter as one of benevolence on his part if he gave it. I for one say that, while it may be looked upon by some as benevolence, I should, I think, demand it as a matter of strict justice and equity. I hope in all the circumstances of the case the right hon. Gentleman will reconsider the matter, and give this concession that he has been asked to give.

Mr. ERNEST EVANS: I trust that the right hon. Gentleman the Chancellor of the Exchequer will give a little more consideration to this Amendment than he appears to have done judging from the remarks he has addressed to the House. So far as I can understand he based his
attitude upon two grounds. The first was that his predecessor refused a similar Amendment last year. I have very great respect for his predecessor, but I should be surprised and disappointed to learn that the right hon. Gentleman based his political conduct upon the standard set up by his predecessor in regard to the acceptance of Amendments in the Budget, or other matters. Secondly, the right hon. Gentleman declined on the score that the cost of accepting the Amendment would be £700,000. I quite appreciate the fact that the Chancellor is anxious to get as many pennies as be can, but it must not be forgotten that the Government hope they may be able to collect revenue from other sources not provided for in the Finance Bill of the year. The Lace Duty has been introduced since the Finance Bill first came before the House. We have discussed that, and cannot therefore do so any further, but it is within the range of the possibility of the Government that they may be looking at other industries also. However, leaving that aside, I trust that the right hon. Gentleman, having already made concessions costing much more than this—there is the concession he has made in connection with the Silk Duties—will do something in this connection.
It does seem to me, when we consider what this Clause really means, that it refers only to people who are either very old or else suffering from infirmity, that this is a matter where we can claim the benevolence of the Chancellor of the Exchequer better than in any other of the

cases where he has made the concession. The amount involved is comparatively small compared to the other circumstances in which the Chancellor has given way. After all, the Income Tax is a tax which is supposed to cover the amount of money that a man has for himself, and available for his own expenditure. Where you get a man who, it may be, is charitably disposed, or from a sense of duty thinks that he ought to maintain somebody who is infirm or somebody too old to obtain any income for himself beyond the limit in the Act, it does seem to me that the cost might legitimately be deducted from the total income of the person concerned. He should not be penalised for his kindliness or for his charity by having to pay Income Tax on an amount from which he himself derives no benefit at all, and which is devoted entirely to the maintenance of those who cannot maintain themselves. There are other interests for which the same kind of claim cannot be made. I do not think we are asking too much in pressing upon the attention of the right hon. Gentleman, and the House, a demand like this which will cost comparatively little, in relation to a portion of income that is devoted entirely to charitable purposes, and that is in the relief of those who take upon themselves the burden of maintaining those who cannot maintain themselves.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 101; Noes, 264.

Division No. 193.]
AYES.
[4.53 p.m.


Adamson, W. M. (Staff., Cannock)
Graham, D. M. (Lanark, Hamilton)
Jones, Morgan (Caerphilly)


Alexander, A. V. (Sheffield, Hillsbro')
Graham, Rt. Hon. Wm. (Edin., Cent.)
Jones, T. I. Mardy (Pontypridd)


Ammon, Charles George
Greenall, T.
Kelly, W. T.


Attlee, Clement Richard
Grenfell, D. R. (Glamorgan)
Kennedy, T.


Baker, J. (Wolverhampton, Bilston)
Griffiths, T. (Monmouth, Pontypool)
Kenyon, Barnet


Baker, Walter
Groves, T.
Lansbury, George


Barnes, A.
Grundy, T. W.
Livingstone, A. M.


Beckett, John (Gateshead)
Guest, J. (York, Hemsworth)
Lowth, T.


Benn, Captain Wedgwood (Leith)
Hall, F. (York, W. R., Normanton)
Macdonald, Sir Murdoch (Inverness)


Bromley, J.
Hall, G. H. (Merthyr Tydvil)
Mackinder, W.


Charleton, H. C.
Hamilton, Sir R. (Orkney & Shetland)
MacLaren, Andrew


Cluse, W. S.
Hardie, George D.
Maclean, Neil (Glasgow, Govan)


Collins, Sir Godfrey (Greenock)
Harney, E. A.
March, S.


Cove, W. G.
Hayday, Arthur
Maxton, James


Crawfurd, H. E.
Hayes, John Henry
Mond, Rt. Hon. Sir Alfred


Dalton, Hugh
Henderson, Rt. Hon. A. (Burnley)
Montague, Frederick


Day, Colonel Harry
Hirst, G. H.
Morris, R. H.


Dennison, R.
Hirst, W. (Bradford, South)
Morrison, R. C. (Tottenham, N.)


Duncan, C.
Hore-Belisha, Leslie
Nayior, T. E.


Edwards, John H. (Accrington)
Hudson, J. H. (Huddersfield)
Oliver, George Harold


England, Colonel A.
Hutchison, Sir Robert (Montrose)
Paling, W.


Evans, Capt. Ernest (Welsh Univer.)
Jenkins, W. (Glamorgan, Neath)
Pethick-Lawrence, F. W.


Gillett, George M.
John, William (Rhondda, West)
Ponsonby, Arthur


Gosling, Harry
Johnston, Thomas (Dundee)
Potts, John S.


Richardson, R. (Houghton-le-Spring)
Stephen, Campbell
Westwood, J.


Scrymgeour, E.
Sutton, J. E.
Wheatley, Rt. Hon. J.


Shaw, Rt. Hon. Thomas (Preston)
Taylor, R. A.
Williams, David (Swansea, East)


Short, Alfred (Wednesbury)
Thomas, Rt. Hon. James H. (Derby)
Williams, T. (York, Don Valley)


Smith, Ben (Bermondsey, Rotherhithe)
Thomson, Trevelyan (Middlesbro. W.)
Windsor, Walter


Smith, H. B. Lees- (Keighley)
Thorne, G. R. (Wolverhampton, E)
Wright, W.


Smith, Rennie (Penistone)
Thorne, W. (West Ham, Plaistow)
Young, Robert (Lancaster, Newton)


Snell, Harry
Thurtle, E.



Snowden, Rt. Hon. Philip
Trevelyan, Rt. Hon. C. P.
TELLERS FOR THE AYES.—


Spencer, George A. (Broxtowe)
Viant, S. P.
Mr. Allen Parkinson and Mr. T. Henderson.


Stamford, T. W.
Watts-Morgan, Lt.-Col. D. (Rhondda)



NOES.


Acland-Troyte, Lieut.-Colonel
Curzon, Captain Viscount
Kennedy, A. R. (Preston).


Agg-Gardner, Rt. Hon. Sir James T.
Dalkeith, Earl of
Kindersley, Major Guy M.


Ainsworth, Major Charles
Dalziel, Sir Davison
Kinloch-Cooke, Sir Clement


Albery, Irving James
Davies, Maj. Geo. F.(Somerset, Yeovil)
Lamb, J. Q.


Amery, Rt. Hon. Leopold C. M. S.
Dawson, Sir Philip
Lane-Fox, Lieut.-Col. George R.


Applin, Colonel R. V. K.
Dean, Arthur Wellesley
Lister, Cunliffe-, Rt. Hon. Sir Philip


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Dixon, Captain Rt. Hon. Herbert
Locker-Lampson, G. (Wood Green)


Astor, Viscountess
Drewe, C.
Locker-Lampson, Com. O.(Handsw'th)


Atholl, Duchess of
Eden, Captain Anthony
Loder, J. de V.


Baldwin, Rt. Hon. Stanley
Edmondson, Major A. J.
Looker, Herbert William


Balfour, George (Hampstead)
Elliot, Captain Walter E.
Lougher, L.


Balniel, Lord
Ellis, R. G.
Lowe, Sir Francis William


Banks, Reginald Mitchell
Elveden, Viscount
Luce, Maj.-Gen. Sir Richard Harman


Barclay-Harvey, C. M.
Erskine, Lord (Somerset, Weston-s.-M.)
Lumley, L. R.


Barnett, Major Richard
Erskine, James Malcolm Monteith
Macdonald, Capt. P. D. (I. of W.)


Beamish, Captain T. P. H.
Fairfax, Captain J. G.
McDonnell, Colonel Hon. Angus


Beckett, Sir Gervase (Leeds, N.)
Falle, Sir Bertram G.
Macintyre, I.


Berry, Sir George
Fanshawe, Commander G. D.
McLean, Major A.


Betterton, Henry B.
Fermoy, Lord
Macnaghten, Hon. Sir Malcolm


Bird, E. R. (Yorks, W. R., Skipton)
Fielden, E. B.
Maitland, Sir Arthur D. Steel-


Blades, Sir George Rowland
Fleming, D. P.
Makins, Brigadier-General E.


Bonthby, R. J. G.
Ford, P. J.
Malone, Major P. S.


Bourne, Captain Robert Croft
Forestier-Walker, L.
Manningham-Buller, Sir Mervyn


Bowater, Sir T. Vansittart
Foster, Sir Harry S.
Margesson, Captain D.


Bowyer, Captain G. E. W.
Foxcroft, Captain C. T.
Marriott, Sir J. A. R.


Boyd-Carpenter, Major A.
Fremantle, Lieut.-Colonel Francis E.
Meyer, Sir Frank


Brass, Captain W.
Ganzoni, Sir John
Milne, J. S. Wardlaw-


Brassey, Sir Leonard
Gates, Percy
Mitchell, Sir W. Lane (Streatham)


Briscoe, Richard George
Gilmour, Lt.-Col. Rt. Hon. Sir John
Moles, Thomas


Brittain, Sir Harry
Goff, Sir Park
Monsell, Eyres, Com. Rt. Hon. B. M.


Brocklebank, C. E. R.
Gower, Sir Robert
Moore, Lieut.-Colonel T. C. R. (Ayr)


Brooke, Brigadier-General C. R. I.
Greene, W. p. Crawford
Morrison, H. (Wilts, Salisbury)


Broun-Lindsay, Major H.
Grenfell, Edward C. (City of London)
Morrison-Bell, Sir Arthur Clive


Brown, Brig.-Gen. H.C.(Berks, Newb'y)
Grotrian, H. Brent
Murchison, C. K.


Buckingham, Sir H.
Guinness, Rt. Hon. Walter E.
Nall, Lieut.-Colonel Sir Joseph


Bull, Rt. Hon. Sir William James
Gunston, Captain D. W.
Nelson, Sir Frank


Bullock, Captain M.
Hacking, Captain Douglas H.
Newman, Sir R. H. S. D. L. (Exeter)


Burgoyne, Lieut.-Colonel Sir Alan
Hall, Capt. W. D'A. (Brecon & Rad.)
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.)


Burman, J. B.
Hannon, Patrick Joseph Henry
Nuttall, Ellis


Burton, Colonel H. W.
Harrison, G. J. C.
Oakley, T.


Butler, Sir Geoffrey
Harvey, G. (Lambeth, Kennington)
O'Neill, Major Rt. Hon. Hugh


Cadogan, Major Hon. Edward
Harvey, Major S. E. (Devon, Totnes)
Oman, Sir Charles William C.


Calne, Gordon Hall
Haslam, Henry C.
Ormsby-Gore, Hon. William


Campbell, E. T.
Hawke, John Anthony
Pennefather, Sir John


Cautley, Sir Henry S.
Headlam, Lieut.-Colonel C. M.
Penny, Frederick George


Cayzer, Sir C. (Chester, City)
Henderson, Capt. R. R. (Oxf'd, Henley)
Percy, Lord Eustace (Hastings)


Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)
Henderson, Lieut.-Col. V. L. (Boot's)
Perring, William George


Cazalet, Captain Victor A.
Heneage, Lieut.-Col. Arthur P.
Peto, Basil E. (Devon, Barnstaple)


Cecil, Rt. Hon. Sir Evelyn (Aston)
Hennessy. Major J. R. G.
Pilditch, Sir Philip


Chadwick, Sir Robert Burton
Henniker-Hughan, Vice-Adm. Sir A.
Pownall, Lieut.-Colonel Assheton


Chamberlain, Rt. Hon. N. (Ladywood)
Herbert, S. (York, N.R, Scar. & Wh'by)
Preston, William


Charteris, Brigadier-General J.
Hogg, Rt. Hon. Sir D.(St. Marylebone)
Price, Major C. W. M.


Christie, J. A.
Holbrook, Sir Arthur Richard
Rawlinson, Rt. Hon. John Fredk. Peal


Churchill, Rt. Hon. Winston Spencer
Homan, C. W. J.
Rawson, Alfred Cooper


Churchman, Sir Arthur C.
Hope, Sir Harry (Forfar)
Remnant, Sir James


Clarry, Reginald George
Hopkins, J. W. W.
Rentoul, G. S.


Cobb, Sir Cyril
Hopkinson, A. (Lancaster, Mossley)
Rhys, Hon. C. A. U.


Cochrane, Commander Hon. A. D.
Howard, Capt. Hon. D. (Cumb., N.)
Richardson, Sir P. W. (Sur'y, Ch'ts'y)


Cockerill, Brigadier-General G. K.
Hudson, Capt. A. U. M. (Hackney, N.)
Roberts, Samuel (Hereford, Hereford)


Cohen, Major J. Brunel
Hudson, R. S. (Cumberland, Whiteh'n)
Ropner, Major L.


Colfox, Major Wm. Phillips
Hume-Williams, Sir W. Ellis
Ruggles-Brise, Major E. A.


Cooper, A. Duff
Hurd, Percy A.
Russell, Alexander West (Tynemouth)


Cope, Major William
Hurst, Gerald B.
Rye, F. G.


Couper, J. B.
Hutchison, G. A. Clark (Midl'n & P'bl's)
Salmon, Major I.


Courtauld, Major J. S.
Inskip, Sir Thomas Walker H.
Samuel, A. M. (Surrey, Farnham)


Craik, Rt. Hon. Sir Henry
Jackson, Sir H (Wandsworth Cen'l)
Sandeman, A. Stewart


Croft, Brigadier-General Sir H.
Jacob, A. E.
Sanders, Sir Robert A.


Crook, C. W.
James, Lieut.-Colonel Hon. Cuthbert
Sanderson, Sir Frank


Crookshank, Col. C. de W. (Berwick)
Jephcott, A. R.
Sandon, Lord


Crookshank, Cpt. H. (Lindsey, Gainsbre)
Jones, G. W. H. (Stoke Newington)
Sassoon, Sir Philip Albert Gustave D.




Savery, S. S.
Stuart, Hon. J. (Moray and Nairn)
Wilson, R. R. (Stafford, Lichfield)


Scott, Sir Leslie (Liverp'l, Exchange)
Sueter, Rear-Admiral Murray Fraser
Winby, Colonel L. P.


Shaw, Lt.-Col. A. D. Mcl. (Renfrew, W)
Sykes, Major-Gen. Sir Frederick H.
Windsor-Clive, Lieut.-Colonel George


Shaw, Capt. W. W. (Wilts, Westb'y)
Tasker, Major R. Inigo
Winterton, Rt. Hon. Earl


Sheffield, Sir Berkeley
Thompson, Luke (Sunderland)
Wise, Sir Fredric


Simms, Dr. John M. (Co. Down)
Thomson, F. C. (Aberdeen, South)
Wolmer, Viscount


Skelton, A. N.
Thomson, Sir W. Mitchell-(Croydon, S.)
Womersley, W. J.


Smith, R. W. (Aberd'n & Kinc'dine, C.)
Tinne, J. A.
Wood, Rt. Hon. E. (York, W. R., Ripon)


Smith-Carington, Neville W.
Tryon, Rt. Hon. George Clement
Wood, E. (Chest'r, Stalyb'dge & Hyde)


Smithers, Waldron
Vaughan-Morgan, Col. K. P.
Wood, Sir Kingsley (Woolwich, W.).


Somerville, A. A. (Windsor)
Waddington, R.
Wood, Sir S. Hill- (High Peak)


Spender Clay, Colonel H.
Wallace, Captain D. E.
Woodcock, Colonel H. C.


Sprot, Sir Alexander
Ward, Lt.-Col. A. L. (Kingston-on-Hull)
Worthington-Evans, Rt. Hon. Sir L.


Stanley, Col. Hon. G.F. (Will'sden, E.)
Warner, Brigadier-General W. W.
Young, E. Hilton (Norwich)


Stanley, Lord (Fylde)
War-render, Sir Victor



Stanley, Hon. O. F. G. (Westm'eland)
Wells, S. R.
TELLERS FOR THE NOES.—


Steel, Major Samuel Strang
White, Lieut.-Colonel G. Dairymple
Colonel Gibbs and Major Sir Harry


Stott, Lieut.-Colonel W. H.
Williams, Com. C. (Devon, Torquay)
Barnston.


Strickland, Sir Gerald
Williams, Herbert G. (Reading)

NEW CLAUSE.—(Provisions as to abatement of Income Tax on company's profits.)

If in any year a productive company does not distribute amongst its shareholders the whole balance of its profits and gains (whether in cash or shares), there shall be deducted from the next payment of tax payable by such company a sum equal to a quarter of the standard rate of tax payable upon an amount equal to the sum undistributed; provided that if at any time such profits or any part thereof are distributed, whether in cash or shares, Income Tax shall forthwith become payable upon the amount so distributed at the same rate as that upon which the deduction aforesaid was calculated.

(2) The expression "productive company" shall, for the purpose of this Section, mean a company registered under the Companies Act, 1908, and engaged in productive industry, and the expression "productive industry" shall mean manufacture, engineering construction, mining and shipping.

(3) Where such a company as aforesaid is engaged in trade or in any industry other than the said industries the deduction of tax granted by this Section shall be allowed only in respect of profits earned in that branch of the company's business which is limited to productive industry.

(4) The provisions of the Income Tax Act, 1918, governing procedure and appeals in relation to exemptions, abatement, or relief, shall apply to claims for relief under this Section.—[Sir Leslie Scott.]

Brought up, and read the First time.

Sir LESLIE SCOTT: I beg to move, "That the Clause be read a Second time."
The principle involved in this Clause and in the Clause standing in the name of the right hon. Gentleman the Member for Carmarthen (Sir A. Mond) is one of great and general importance. Both put forward a proposal, which has been submitted in previous years, that the rate of Income Tax to be charged upon the portion of a company's profits not distributed to shareholders, but used for
development, should be lower than the standard rate. The object of the proposal is to encourage development. In these days, when the burden of taxation is inevitably so heavy upon industry, the greatest Chancellor of the Exchequer is the one who does industry the least harm. I invite the attention of the House to that aspect of the question, because it is the essence of these proposals. If the Chancellor of the Exchequer hung on his mantelpiece the daily maxim, "Do as little harm as you can," then when he died, if he had observed his maxim, ho would deserve an epitaph on his tomb, "He did as little harm as he could." It is important, having regard to the burden of taxation that has to be borne, to consider how that burden can be exacted so as to cause the least harm in exacting it. The industrial prosperity of this country was built up in the last century almost entirely on annual savings, and those industrial concerns which have prospered most attained their prosperity by putting, out of their annual profits, large sums to reserve, to be used for the purpose of development, improving their plant and machinery, and so on. That is the essence of all industrial progress. At the present time, when the state of affairs financially is so different from what it was before the War, it is important to realise that the process of putting aside profits for development is a much more difficult one. The purchasing power of money is much less than it used to be, and the insistence by shareholders on a maximum dividend is, consequently, more urgent than before. The cost of production as regards labour, materials, rates and taxes and everything else is much higher than it used to be, and the result is that the available volume of profits for distribution is smaller. The smaller
profits coincide with a demand by the shareholders for a greater distribution.
Those tendencies must, necessarily, militate gravely against the rehabilitation of machinery and against the progress of every industrial concern, as science progresses. If taxation could be so adjusted as even partly to neutralise that bad tendency, the Chancellor of the Exchequer would have achieved a step in the direction of doing less harm to industry. The belief of those who support the principle contained in this Clause and that of the hon. Member for Carmarthen is that it can be done. The principle of the Clause is to provide a financial stimulus to every board of directors to use as large a part of the profits as possible for the purpose of developing the company instead of for distribution to shareholders. That financial stimulus, once the principle had been adopted, would always be acting, silently acting like most economic forces, but none the less effectively because acting silently. If the result is what we believe it must be, namely, to encourage boards of directors to use more of their annual profits for development, it is obvious that the concerns which do that must progress better than those which do not. The progress of our industrial productive concerns would be greater than if this stimulus were lacking, and in the result the yield of Income Tax to the Chancellor of the Exchequer in subsequent years would increase, and make up for anything that might be lost by this concession in the year when it was put into force. Of course, it is essential, if this proposal is to be included in our taxing legislation, that there should be a safeguard against abuses. The Clause which stands in my name, and that of other Members of the unofficial Industrial Group, provides such a safeguard, because it states that if at any time money, that has been put to reserve is distributed, whether as cash or in shares, the tax that was remitted in the first instance shall then automatically become payable.
The principle of these Clauses has been before this House in its discussions on at least two or three, and perhaps more, Finance Bills. The right hon. Gentleman the Member for Carmarthen himself brought up a similar Clause in 1923,
or, at any rate, supported one. The present Minister of Health last year, the year after he had been Chancellor of the Exchequer, moved such a Clause, and it was supported by the present President of the Board of Education. The present Minister of Health stated in the course of the Debate on the Budget, speaking on the 8th of July:
In the course of the Debate on the Budget I expressed the view that it would be a good thing for the trade of this country if manufacturers could be induced to put more money into bringing their machinery and equipment up to date, even at the cost of a lesser distribution to shareholders. I went so far as to say it was a mistake, in my view, to consider that surplus and profits were the same thing, and that an appreciable part of the surplus at the end of the year ought realty not to be considered as profits at all, because they should constitute a fund from which machinery and plant ought to be kept in accordance with the highest standards, and not allowed to become obsolescent."—[OFFICIAL REPORT, 8th July, 1924; col. 2211, Vol. 175.]
That is what the present Minister of Health said last year, and I commend his remarks to his colleague the present Chancellor of the Exchequer. The right hon. Gentleman the Member for the Hill-head Division of Glasgow (Sir R. Home) has also expressed himself in favour of the principle involved in the Clause. What line the opposition above the Gangway will take upon the Clause remains to be seen. I hope that in the common interest of industry, in the interest of both sides, employers and employed, they may support the principle of the Clause. If the principle is what we say it is, and believe it to be, it must tend to a reduction in the cost of production, and therefore increase our power of competition in foreign markets by enabling us to sell at a lower price; and that must tend to help in the solution of the great problem of unemployment.
At the present moment the scientific development of our competitors, Germany, France, Holland and the United States is so keen, and progressing so fast, that it is more than ever important that we in this country should miss no opportunity, and they are few enough, when the legislature of the country can contribute directly to industrial progress or prevent damage being done. Germany, operating under a financial stimulus different in degree but
similar in kind, the stimulus of the ever falling mark, has, since the War, completely renewed nearly the whole of her plant and machinery. As was said of Germany in the Dawes Report:
Ever since 1919 the country has been improving its plant and equipment; the experts specially appointed to examine the railways have shown in their report that expense has not been spared in improving the German railway system; telegraph and telephone communications have been assured with the help of most modern appliances; harbours and canals have likewise been developed; lastly, the industrialists have been enabled further to increase an entirely modern plant which is now adapted in many industries to produce a greater output than before the War.
That was very largely done by the stimulus of the financial scheme of the falling mark pressure. As regards France, let any hon. Member go to the industrial town of Lens in Northern France, and he will find that my statement is borne out: the re-equipment of industry has been marvellous. The United States is also up to date in these matters in regard to industrial development; and all these countries are the competitors we have to face.
In addition everyone of those four countries I have mentioned have in their taxation law a difference between the tax upon dividends that are distributed and the portions of profits that are not distributed.
In regard to Holland, I have received recently a note from the permanent secretary to the Dutch Treasury, and he tells me that in the case of companies the Income Tax is imposed only on dividends and profits distributed, and no tax at all is charged on the companies' profits unless and until they are distributed. In Germany shortly after the War, and before the great slump in the mark, the position was that the tax on companies' profits was 20 per cent. when allotted to reserve and not distributed, whereas profits distributed paid a tax of 60 per cent. For a time that system lapsed, but in this year's Budget I understand it is being resumed. In the United States and in France the legislation, both as regards companies and as regards Income Tax, is somewhat different, and it would be impossible to find an absolute analogy. The broad fact, however, is that in both countries there is a tax on companies' profits, and there is an Income Tax to be
paid on the incomes of individuals, with the result that the portion of profits distributed to individuals pays both taxes, whereas the portion placed to reserve only pays the profits tax, and there you get the differentiation which we are asking for in this new Clause.
Regarding these two taxes as one, there is a lower rate on profits put to reserve, and used for development purposes, than there is upon profits distributed. Even so in France they are not content with this arrangement, and in March this year there was a conference of the Presidents of Chambers of Commerce, and they asked for a complete dispensation in regard to this tax upon profits of companies put to reserve.
That is the position, and broadly speaking that is the case for consideration. It is most important either that the proposal I am putting forward should be adopted now in this year's Budget, or if that is not possible, then that it should be adopted next spring. If the Chancellor of the Exchequer says that in this year's Budget the cost would be too much, and would upset the whole balance of his Budget, of course we should have to submit, and we quite recognise that fact. I have gone closely into the question of the cost of such a provision as I am suggesting in order to make it possible for him to accept what I may call the thin end of the wedge this year. Although I want the principle adopted wholly and not partially, I have framed this Clause) in a very limited way for the express purpose of making it cost as little as possible. I know it is difficult to ascertain what the cost of a proposal of this kind is likely to be, but having regard to the extreme importance of not taking an unduly long time over this Debate, it is undesirable for me to go into the question at length. I put a question to the Chancellor of the Exchequer not long ago as to the cost of this proposal, and he gave me the figure of £14,000,000 as being the cost of a 2s. remission for productive companies, including both companies under Parliamentary Charter and companies registered under the Companies Acts. I cannot help thinking that that estimate is rather excessive, because in the "Economist" of 25th April last there appeared an analysis of the returns of about one-third of all the companies re-
gistered in this country, and raking all their profits, the amount put to reserve was 2 per cent. of their capital. Taking those companies which had a capital of £1,300,000,000 as typical, the total number of companies in this country of all kinds would have a capital of about £4,400,000,000, and 2 per cent. on that obviously would not be a figure which would be ten times as much as the Chancellor of the Exchequer suggested. Therefore, I think that estimate was considerably in excess of the cost of the tax. But the reason I am anxious to get this claim adopted is, because I regard it as the thin end of the wedge, and in this way the Chancellor of the Exchequer, at, I believe, a very small cost, would be able to test the results of this proposal.
I agree that, limited as is this Clause, all sorts of inequalities will arise. Private firms will object that they are left out, while companies are allowed to come in; statutory companies will complain that they have been left out; while companies that do not come within the category of productive companies, will also object. All I have tried to do is to confine my proposal in such a way that the sum required to carry it out would not be one that the Chancellor of the Exchequer would be inclined to regard as impossible. I shall be glad to hear what the Chancellor of the Exchequer has to say on this point, and even if he cannot adopt my modest thin end of the wedge this year, I hope he will consider the subject with a view to this deduction being made next year, and not with a view to placing departmental difficulties in its way. It is perfectly clear from the fact that there is a comparable provision in the legislation of the four countries I have mentioned, that the difficulties in practice cannot be said to be insuperable. I think it is in the interests of this country that this principle should be adopted, and I hope that if the right hon. Gentleman is not able to accept this New Clause he will give the House an assurance that he will be able to adopt this proposal next year.

Sir ALFRED MOND: I rise for the purpose of seconding the Motion which has been so ably moved by the hon. and learned Member for the Exchange Division of Liverpool (Sir L. Scott). There is a New Clause standing in my name
which goes a good deal further than the proposal we are now discussing, but from the point of view of convenience it has been thought best to have a discussion on both these New Clauses at the same time. On the general question I would very much like to support what has been said by the hon. Member who has just sat down. During the course of the Finance Bill we have had a number of discussions as to the merits and demerits of the reduction which is proposed in the Income Tax, and it has been argued in some quarters of the House that a reduction of the Income Tax does not of necessity create any advantage to industry or to trade.
I will not enter now into the economic arguments on that subject, but even those who have taken the line that the reduction of the Income Tax proposed in the Budget is not necessarily of any advantage to industry and to trade, because the money derived in this way by the individual may be spent in an uneconomic manner, cannot raise such an objection in connection with the proposal we are now discussing, which is a more limited application of the reduction of the Income Tax for the purposes of the development of trade, and not only its development but keeping up to a proper standard of efficiency the industrial enterprises of this country. Nobody can argue that any reduction of the Income Tax will not only have a direct and absolutely beneficial effect on the whole industry of the country. It has already been pointed out that this principle and ideal has been recognised in many other countries. May I quote the case of the Corporation Profits Tax in America, where 12½ per cent. only is charged on the profits distributed, and where no charge at all is made upon the profits kept in reserve.
There is a tendency in America to accumulate large sums in order to adopt new processes, and to allow the scrapping of old plant to take place. That is what is being largely done on the other side of the Atlantic. The same principle has been adopted to some extent in Germany and other countries. Income Tax legislation and public companies are treated much better than they are treated in this country, and the differentiation in this respect in regard to the imposition of the Income Tax in foreign countries does not seem to be fully realised here. I
remember a discussion recently in which the hon. Member for Huddersfield (Mr. J. Hudson) took part, and in the course of a very able speech he seemed obviously to be under the impression that companies only paid Income Tax on the profits distributed and not on profits put to reserve. Under our legislation the Income Tax paid by a limited liability company has no relation whatever to what is done in foreign countries, because we pay much more Income Tax on profits, and under the depreciation scale, any industrial concern could not possibly depreciate so little as the depreciation allowances of the inland authorities would allow.

Mr. DALTON: And they are doing very well on it.

Sir A. MOND: The hon. Member who has interrupted me, and who is a professor of the new economics, ought to know what the effect of that would be. Surely it is all to the advantage of industry that proper provision should be made for depreciation and to replace obsolescent plant. On that subject I must point out that the keen competition in every form of industry has made it necessary to make provision for the replacement of one process by another, and the general improvement of machinery and plant, and this has to take place almost at an alarming speed, and only those who are in a position to provide sufficient money to replace their machinery and introduce new processes can hope to survive at all in the modern industrial struggle. What is the proposal which we have put forward in both these Clauses? It is not even that money should be exempted from Income Tax which is set aside for this purpose; it is a much more modest proposal. It is that a very moderate deduction should be made—indeed, to my mind, it is too small—for the purpose of stimulating directors of companies to increase their reserve funds, to replace their machinery, and to give added incentive in that direction, which to-day is sadly lacking.
There is no doubt in the mind of anyone who is engaged in practical business that the present very high taxation on enterprise acts as a deterrent to enterprise, to initiative, and even to the daily carrying on of business. The necessity of handing out a quarter of the profits
which have been earned with great anxiety and trouble during the year, is a discouraging psychological factor in our present industrial world, and, to my mind, it accounts for some of the unemployment at present existing. By this proposal we should at any rate stimulate, and, I think, stimulate to a considerable extent, the wise and prudent practice of not distributing profits too largely, and it would give directors the advantage, which they would be glad to have in some cases, of being able to give to their shareholders a good reason why they were not paying larger dividends. My hon. and learned Friend has already referred to the very interesting speech last year by the present Minister of Health, and I should like to quote a few words from that speech, which I hope has been read and digested by the present occupants of the Government Bench who are dealing with the finances of the country. The right hon. Gentleman said:
It would be possible to deal with this matter by way of increased allowances for depreciation, but that method does not commend itself to me because it would enable one to set aside sums in the nature of secret reserves.
That, I think, is a very sound objection. He concluded with the following words, which are worth quoting:
I feel very strongly that it is a matter which is worthy of attention. We are going, possibly, to find ourselves very seriously menaced by competition from the Continent, where the great profits that were made by industrialists, in Germany in particular, during the period of inflation were largely invested in bringing up to date their factories. I am anxious, in view of this, to see our manufacturers here encouraged to put aside money for this particular purpose, and I hope very much the Chancellor of the Exchequer may see his way to accept this proposal."—[OFFICIAL REPORT, 8th July, 1924; cols. 2211–2, Vol. 175.]
He has now in office a Chancellor of the Exchequer of his own party, and I am sorry he is not here to make his speech to his own Chancellor of the Exchequer, and extract from him what he failed to extract when in Opposition from the Chancellor of the Exchequer of last year.
Fortified, as we are, by the support of a Cabinet Minister on this point, it is difficult to imagine that we shall not receive a sympathetic reply from the Government Bench. I think it is very regrettable, though I imagine it was unavoidable that neither the Chancellor of the Exchequer nor the Prime Minister is
present during a very important discussion affecting very seriously the industrial position. This question has been brought up on a good many occasions, and I find, looking back to 1923, that I moved a Clause in very similar terms to the one that stands in my name on the Order Paper to-day, and at that time it received very sympathetic consideration. The objection raised to it by the Solicitor-General, who replied, will, I hope, not be raised again to-day. The Solicitor-General then objected to any differentiation in Income Tax in the sense that the Clause proposed, on the extraordinary ground that it was in no way the duty of the Inland Revenue authorities to say in what way the money was spent; their whole purpose was to get the tax, and when the tax was collected they had no further concern. I can scarcely imagine that view prevailing to-day, and I do not know why it should ever have prevailed. Surely, in levying taxation, you are not only entitled, but bound, to see how this taxation is going to affect, and what result it is going to have on, the industry and life of the nation that is being taxed. If that be so, surely it cannot be argued that you have no concern with what is done with the money that is saved from taxation, for the simple reason that you levy your taxation in a particular way in order to achieve a certain economic result.
I think all the discussion on the present Finance Bill has shown that the point we are arguing now is much more fully appreciated than it was. It is an advantage, not only to individuals, but to the country at large, that we should have efficient industries and, in fact, it is only by having efficient industries that we can economically survive. If that be so, we ought to receive considerable support from the Labour benches, because hon. Members on those benches are deeply interested in realities, and those for whom they claim particularly to speak are as deeply interested in this matter as we are. Our proposal is based upon our practical experience of this very question, and we realise, perhaps, the more strongly from our practical experience, the great importance and real seriousness of the problem which this matter presents. In Germany, before the War, companies were compelled to put to reserve a cer-
tain percentage of their profits. In this country the matter has never been dealt with in that stringent way; we have been more lax in our company system than they have been on the Continent of Europe. [Interruption.] If hon. Members think there is any advantage in that, there is no reason why we should not have it also. At any rate it is better than Russian methods.
I should like to refer to one objection which I know has been raised on technical grounds to a proposal of this kind, and that is that the reserves of companies might some day be capitalised and issued as bonus shares in order to avoid Income Tax, and that there would in consequence be a loss to the revenue. In my hon. and learned Friend's Clause, and also in the Clause which I have on the Paper, that point is quite fairly met. It would obviously be unfair to the revenue that payment of Income Tax should be avoided merely by the method of putting sums to reserve year after year and then issuing them as bonus shares. If such a step were taken at any time, it is obvious that the shares in question must be treated for Income Tax purposes as if they were income, and Income Tax must be levied on them in a proper way and at the proper rate.

Mr. ELLIS: What rate?

Sir A. MOND: It might be the rate for the current year, or it might be the average rate for the period, which perhaps would be fairer. Either method, however, could be adopted, and it would be easy to overcome any difficulty in that direction. I do not know whether the Chancellor of the Exchequer could see his way to accept my hon. and learned Friend's Amendment in his present Budget. The most serious criticism that can be levelled against the Budget is that, instead of concentrating, as might have been done, upon an object of this kind, whereby a reduction of Income Tax could be focussed in a direct manner upon industry, and create an immediate nexus between the remission of taxation and the improvement of plant, a general survey has been taken over the whole class of Income Tax payers, which is a much more doubtful proposal from the point of view of this purpose, and which is more difficult to adjust and, perhaps, more remote in its consequences, and certainly not so beneficial in its results. Personally, I think
it would have been much more advisable, if no greater remission than 6d. was within the purview of the Chancellor of the Exchequer, to proceed first by dealing with that part of the Income Tax which would have an immediate and stimulating effect on the industries of the country.
No doubt the Financial Secretary will tell us what is the view of the present Government on this matter. I do not know whether, in this nicely balanced Budget, which has rather come unstuck in different parts by this time, it is possible to tackle a proposition of this kind. The Chancellor of the Exchequer, in introducing his Budget, prophesied that he would be there for at least four or five years, and said he was throwing out a large and spacious programme, as I think he called it, and spoke of the great financial reforms which he was going to make. He has time before him, therefore, to go into these matters; if he cannot do it now, he has time to do it next year. He can then foresee, no doubt, the reductions which he will be able to obtain in expenditure, and the increased revenue which he will be able to obtain from his new duties; and he will then be in a position to achieve a long-asked-for and much wanted, and, to my mind, one of the most useful reforms in Income Tax legislation that any Government could possibly introduce.

Mr. GUINNESS: The House is, I am sure, indebted to the hon. and learned Member for the Exchange Division of Liverpool (Sir L. Scott) for having brought before it this very interesting topic, but I think he can hardly have been quite serious in saying that he was proposing this in a email form because he wished it to be within the power of the Chancellor of the Exchequer to accept it in the present Budget. The Clause which we are now considering would involve a loss to the revenue of £7,500,000 in a year, and the proposal of the right hon. Baronet the Member for Carmarthen (Sir A. Mond) would involve a loss of about £13,000,000 a year.

Mr. PETHICK-LAWRENCE: Is that for a full year, or for the current year?

Mr. GUINNESS: For a full year. While there is a margin on the Budget, neither of these figures could conceivably be accepted without upsetting it. I am sure we all agree with the excellent object
that the Mover of the Clause has in mind in encouraging saving, but it is a matter of very great complexity, when you get down to details, as to how that can be done. The hon. and learned Member mentioned that this matter was brought forward last year, and the right hon. Gentleman the Member for Carmarthen has mentioned that a member of the present Cabinet took a prominent part on that occasion.

Sir L. SCOTT: If I might interrupt the right hon. Gentleman, last year it was the present Minister of Health—who the year before had been Chancellor of the Exchequer—who actually moved the Clause, supported by the present President of the Board of Trade.

Mr. GUINNESS: On that occasion the Clause was brought forward, no doubt as it is to-day, as a demonstration of the necessity of dealing with this very important question. The Chancellor of the Exchequer authorises me to say that he is going to consider this matter and to explore it in all its bearings to see whether there is any method by which it could be dealt with on a safe and satisfactory basis. I do not think hon. Members can reasonably be impatient in this matter of very great difficulty, and perhaps, in view of what has been said, it is well in a few sentences to point out some of the difficulties which are involved, not only in this proposal, but in any recasting of our Income Tax system to consider people's liability to be taxed on the ground, not of their income, but of their expenditure. The Clause we are considering deals with only one class of savings—reinvestment in the reserves of the company in which the profits were earned. My hon. and learned Friend admitted quite frankly that he had brought it forward merely as the thin end of the wedge, and it is patent to everyone that if we once allowed this thin end to be inserted, it would very shortly be driven home to the level of the proposal of the right hon. Gentleman the Member for Carnarvon Boroughs, and it is very doubtful whether we could stop there. After all, why should you limit these incentives to saving to the case of public companies who receive their fresh capital for development from their own resources? Why is the reinvestment of funds in the companies in which the profits were originally made
more meritorious than an original investment in a new issue? After all, it has not been proved that, at present, companies, generally speaking, are in need of more capital. I am afraid a large number of them need not more capital but more orders. If you once begin to give a concession of this kind, I do not see how you are going to pull up short of giving remissions of taxation to all savings. May I remind the House, too, of the very novel questions of incidence which will necessarily be involved in the acceptance of any such proposal. My own feeling is that this Clause would mean, not a subsidy to reserves, but a subsidy to dividends. If it be the case that, generally speaking, established industrial undertakings already set aside what is necessary for their business, is it not certain that they will not put any more to reserve, but that this remission of taxation will merely be a subsidy to dividends and will not go to any increased accumulation of reserves?
But, apart from that, there is the broader question of the incidence of the remission. If you are going to lighten the tax burden on savings, you must necessarily increase the tax burden on spendings. Whatever you shift from the shoulders of the man who is in a position to save must be thrown on to the shoulders of the man who is obliged to spend. How would this work out? Might it not prove to be a tremendous subsidy to the rich, who can afford to save, a tremendous handicap on married people, who have to spend to bring up their families and to face another meritorious form of capital expenditure to enable their offspring to be equipped for the battle of life? I am afraid any widespread remission of taxation on savings in this way would mean an increase of many pence in the pound on the greatly narrowed area of Income Tax which would be left and which would have to be borne out of spendings. Last year, we are told by the right hon. Gentleman, the Solicitor-General said it was not the duty of the Revenue to see how income was spent, and he was rather surprised at that statement. I should have thought it expressed an absolutely obvious truth about our present system of taxation. It might or might not be desirable for the Revenue to go into how people spend
their money, but it certainly is not their practice at present, nor would there be any legislative or statutory foundation to interfere in that matter. So far our Income Tax has been a tax on income and on nothing else, and I apprehend that this proposal would mean a revolutionary change in the basis of taxation and would transform our premier tax from being a tax on income into a new basis of being a new tax on expenditure. It is not for me to express any opinion as to whether this wide and far-reaching change can be made, but anyhow it cannot be made on a Clause brought forward on the Report stage of a Finance Bill. If the House and the Government responsible is to accept a transformation in tax methods of this character, it must at least be done with our eyes open and aware of the revolutionary character of the change that is proposed.

Mr. W. GRAHAM: One of the great advantages of the reply we have just had is that we have now discovered which is the really revolutionary party. I am bound to remind the right hon. Gentleman that this proposal, in an even more advanced form, was pressed very strongly on us during our term of office last year and it was advocated at this very Box by the present Minister of Health, who was if I remember rightly, supported in the Division Lobby by a considerable number of Conservative Members of the House. That is a very extraordinary situation because we have this proposal condemned root and branch as a revolutionary change by the Financial Secretary to-day. So that when I look back upon our term of office I think I am entitled to say that we may well be ashamed of our moderation and restraint. But I am glad the Financial Secretary has made it perfectly plain that this proposal cannot be entertained, although I do not understand his statement that between now and Budget time next year inquiry is to be made as to whether anything in this direction can be done. The truth is that this is a very old proposal which, on every analysis that has been made, absolutely fails. I do not want to dwell too largely on the technical difficulties of a device of this kind, but let the House observe the Clause. The hon. and learned Gentleman proposes to give this one-fourth abatement in Incomer Tax to what he calls productive companies, and these are mining, engineering
and manufacturing. There is no student of taxation who would ever for a moment accept that definition of production at all. There are all kinds of other companies directly and indirectly engaged in industry which are either productive companies or ministering to production and accordingly, in the very operation of this Clause, you would at once land yourself in a great mass of technical difficulties in the administration of Income Tax. On that ground the proposal fails.
Secondly, the hon. and learned Gentleman was altogether wrong in trying to draw any analogy at all between the conditions in foreign countries, and more particularly in Germany, and our position in industrial enterprise in Great Britain. It is quite true that certain differential methods are employed in other countries, but when we look into their systems of taxation we find that they have devices and methods which are unknown in this country, and in the case of Germany the whole position has been distorted and poisoned, by the large scale depreciation which took place, enabling them to get rid of a great deal of their internal debt and rendering an analogy of that kind perfectly impossible in the Debate in which we are now engaged. I feel I need not argue this matter at any length to-day, because the Financial Secretary has made it plain that no Government could entertain it. I have merely risen for the purpose of pressing the Government not even to undertake the inquiry which the Financial Secretary seems to suggest. There is only one point in the industrial field which I think calls for a little investigation at present. When the Royal Commission considered this and kindred problems in 1919 and 1920, it did say there were certain issues of depreciation, obsolescence and wasting assets upon which, in the national interest, some kind of uniform policy should be framed, and I dare say I speak for a good many Members on this side of the House when I say that in that sphere there are probably changes in taxation which should be introduced, because if you take the depressed condition of the mining industry at present, there is not the least doubt that there you want a programme as regards wasting assets which, of course, we have not got, although the Royal Commission made specific recommendations on that point.
Beyond that, however, we dare not go and we certainly cannot entertain any suggestion that you are going to give a differentially lower rate of tax to a profit merely because that profit is placed to reserve for purposes of development or anything like it.
6.0 P.M.
The right hon. Gentleman the Member for Carmarthen (Sir A. Mond) fell foul of an argument used by the late Solicitor-General when he resisted a similar proposal some time ago. The then Solicitor-General made it clear that we should never, in the Income Tax practice of this country, look to the destination or the use of a profit. I think that principle is perfectly sound. We cannot embark upon a device of that kind without considering every individual taxpayer who has any saving at all. That would apply with equal force, and, in some cases, a great deal more, to the smallest saving placed to reserve and which had gone to the development of some industrial enterprise in the State which also in justice would be entitled to a lower rate of tax. That is the natural logic of the situation. If you extend it far enough you simply come back to the great mass of taxpayers in this country. Your remedy then appears to be a lowering of the general burden of taxation all round, and not a differential reduction in favour of one class as against the rest of their fellows. On every ground, without arguing the matter at any greater length, I agree with the Financial Secretary that this new Clause would mean a revolution in Income Tax practice, and there is not the least doubt that, with an expenditure like our own of more than £800,000,000 at the present time, if it were adopted, it would mean a heavier burden upon the rest of the community for the benefit of a particular section who ought to make provision in a different way.
We on these benches have never disputed that a great deal of the capital in this country is misdirected, or not used to the highest advantage at the present time. Even in the midst of our great burden of taxation and industrial distress we see millions of money raised in this country for what cannot be called productive enterprise at all. On the other hand, we find valuable enterprises struggling to obtain capital or only ob-
taining that capital on onerous terms. Our suggestion is that the time has come, and more than come, when we should definitely direct our available capital into truly remunerative channels. Hon. Members opposite are not prepared to agree with that. They regard that as a Socialistic device. I prefer that better method of dealing with the kind of difficulties we are discussing this afternoon. There is no remedy whatever in introducing a revolutionary change in our Income Tax system which can only operate unfairly against the overwhelming mass of our taxpayers.

Mr. HANNON: I wish to draw attention to the extraordinary speech made by the Financial Secretary to the Treasury. He began by expressing in very sympathetic terms the desire of the Treasury to consult the heads of industry on the important new Clause proposed by my hon. and learned Friend the Member for the Exchange Division of Liverpool (Sir L. Scott) and seconded by the right hon. Member for Carmarthen (Sir A. Mond). Having said that, he proceeded, in a long disquisition, to speak on the revolutionary qualities of the new Clause. I submit that he cannot begin by a volume of expressed sympathy and then finish up by describing the new Clause as revolutionary. The Amendment is exceedingly simple in its proposals. In discussions which have taken place with his right hon. colleague the Chancellor of the Exchequer and himself during the past 12 months, a very sympathetic ear was given to the proposals submitted by industry in this respect, and to-day in this House on the moderate and generous Amendment moved by my hon. and learned Friend we thought we were going to have some responsive note from the Treasury in the interests of productive enterprise in this country; but we were told by the Financial Secretary, and his remarks were loudly cheered by hon. Members opposite, that this proposal to relieve industry of an unfair burden, and to stimulate enterprise with a view to the expansion of industry, is a proposal revolutionary in character.
A great many people engaged in industry in this country have begun to think from day to day that the present Government are not very sympathetic
towards business men, and I am bound to say, after the speech of the Financial Secretary this afternoon, that there seems to be a good deal of justification for that conclusion. I am exceedingly sorry that the Chancellor of the Exchequer is not in his place. He has indicated that he has some feeling of sympathy towards this proposal. We have in this country to-day a- great number of enterprises that are struggling to survive in the face of competition in the world market. The concession sought for in this new Clause would have enabled them, by adding to their opportunities of expanding their enterprise, to meet that competition more effectively. Of course, distinguished economists on the other side object. All I have to ask is, without repeating the arguments of my hon. and learned Friend and the right hon. Member for Carmarthen, that the Treasury, even now, following upon the speech of the Financial Secretary, will agree to consult the heads of our great trade organisations during the next 12 months and see whether a solution of this question cannot be found

Mr. GUINNESS indicated assent.

Mr. HANNON: The right hon. Gentleman indicates his assent, but how he can ride two horses I do not know.

Mr. GUINNESS: I thought that I made it perfectly clear that we are anxious to find a way of achieving this very difficult object of encouraging savings without incurring the results which might be expected from this particular proposal. I felt it to be my duty to point out the difficulty. I do not want the hon. Member to think that the Government are unsympathetic towards industry. We are looking for a way of doing what is desired in a safe manner, without risking unfortunate results.

Mr. HANNON: I am delighted to hear the observations of my right hon. Friend, but when he made his speech he did not express his attitude towards the new Clause in terms which would make us feel that there was very much sympathy for it at the Treasury. I do appeal to the House that in making this concession to productive industry, in order that it may be able to expand its activities in this country in the face of world competition, we should have all the sympathy that we can. Those who are familiar with the intensity of industrial organisation in every part of the world in order
to create and maintain markets for their goods, feel that in this country industry should get every conceivable help and sympathy, both from the Government and from this House; otherwise, it will be impossible for us to maintain our position in the future. I hope that when the right hon. Gentleman is consulting with the heads of great industries in this country—the Association of British Chambers of Commerce, the Federation of British Industries and other great trade organisations—he will not put his case in the same extravagant language which he has used in this House to-day.

Mr. HILTON YOUNG: I have been in considerable doubt about this new Clause, and the discussion leaves me in greater doubt. We have seen the singular, I might also say the diverting spectacle of the official reply on the new Clause coming from the Front Opposition Bench, while the Financial Secretary to the Treasury has advanced in opposition to it arguments which we should expect from the Back Benches on this side. I hope that the Financial Secretary will not ask some of us to be persuaded of his arguments before we vote against the Clause, because were I to be so placed I should feel that I was voting on financial matters of much more importance. It will not escape the attention of the House that in his argument this afternoon the right hon. Gentleman has destroyed the whole of the Government case for the reduction of the Income Tax. I argued in support of that reduction. I think it was the right thing to do, and that prevents my being converted by the Financial Secretary's arguments this afternoon.
I think that more concessions should be made. More reductions of taxation should be made by the Government in order to promote savings. The Financial Secretary has argued against any action on the part of the Government to promote savings. The greater really includes the less. The Financial Secretary has drawn a distinction. He says that you must not promote the interests of those who can afford to save and not to spend, at the expense of those who have to spend. That is not a true distinction. He would not, I am sure, contend that the man who saves his income does not spend it. Of course, he spends it. He foregoes the advantage of it for the time but spends it, and it is used in the production of
goods and services, just as much as is the case with the man who spends the first part of his income. Therefore, there is no true distinction drawn by the right hon. Gentleman. He says that what the industries of this country want at the present time is not fresh capital but fresh orders. Is not that rather a facile antithesis? Is it a true one! Is there no connection between fresh capital and fresh orders? I think it is perfectly obvious. We are not getting fresh orders because we are not getting enough fresh capital. [HON. MEMBERS: "Oh!"]

Mr. HANNON: Hear, hear!

Mr. HILTON YOUNG: Why are orders not coming to this country? Because we cannot quote competitive prices. Why cannot we quote competitive prices? Because our standard of production has not been sufficiently maintained by the refreshment of industry with fresh capital. That is the opinion of every man in trade. Although there is sound principle in this proposal, I agree with the Financial Secretary that you cannot draw a line as is done by this Clause. My right hon. Friend the Member for Carmarthen (Sir A. Mond) extends it further than the hon. and learned Member for the Exchange Division of Liverpool (Sir L. Scott). My hon. and learned Friend would include only incorporations. My right hon. Friend would include partnerships. You cannot stop there. You are admitting the principle of differentiation in favour of savings. That is a matter which in the coming inquiry we hope will be pressed forward. You are admitting a, new principle of great importance, going to the basis of our principles of taxation, and one which is as important as the differentiation of earned and unearned income. If you make differentiation in favour of earned income, why should you not extend the field of preference covered by the State to preference as to the manner in which the money is spent. I think that is perfectly logical, and I am sure it is perfectly sound in economics. I think the only difficulty is in practice. There is a very great difficulty in practice.
The necessities of the Revenue are vitally concerned in this Clause. If it were to be passed in a hurry without sufficient fortification of the Income Tax I believe it would be a very serious
danger to the Revenue structure of this country. I am afraid that the provisos inserted in the Clause by my hon. and learned Friend and my right hon. Friend are not adequate to protect the Revenue. Let me point out one danger. I believe it to be impossible to earmark a profit once it is put away in reserve. Accountants and intelligent secretaries will be too many for the Revenue if you simply trust to the permanent earmarking of certain profits. Suppose that a profit of £1,000 is made this year and put to reserve. What so easy to an ingenious and not too scrupulous accountant—such there are, in small numbers, no doubt—as in the next year to take that thousand pounds into a secret reserve; and in the following year it is dragged back into a visible reserve and is distributed all round. Or a company is reconstructed. Companies can reorganise their capital and can create a company of straw. There are thousands of devices by which a company can conceal profit which it puts away into reserve. It needs the most careful investigation and fortification in order to prevent this being used as a danger to the Revenue. It is a useful principle if it can be applied, and it should not pass the ingenuity of man to devise sufficient fortification of that principle. I earnestly hope that it will be taken into consideration.

Mr. LEES-SMITH: The argument of the Mover of this New Clause, I gather, was that it was essential for big companies to have more money to put aside out of revenue, and that taxation is so high that they have not sufficient margin for that purpose. Though I heard him state that argument again and again, I did not hear him make any attempt to prove it by the facts and the balance-sheets which our great companies are issuing every week. The fact is that the reserves on which we have to depend in this country are contributed mainly by large, successful limited companies, and one of the facts which may be noticed by anyone who reads the balance-sheets of these companies at their annual meetings, held from week to week, is that a very large proportion of them already have enormous sums in reserve in Stock Exchange securities.
I am not interested in these companies, but I like reading their balance-sheets, and I read 10 days ago the balance-sheet
of Boots submitted at their annual meeting. I found it stated that they had £750,000 in reserve in War Loan. Only a few days ago I read the balance-sheet of Howard Bulloch, which has a capital of £1,500,000, and it had nearly £1,000,000 in reserve outside its business in Government, Trustee and similar securities. As one looks into balance-sheet after balance-sheet, one finds, I believe, that in the majority of cases of these big successful companies they have reserves of a similar kind. The result of this Clause would be simply to hand over millions of pounds, £7,500,000 now and £13,000,000 according to the Liberal Amendment, which would increase probably to £20,000,000 or £30,000,000 if we follow this Clause to its logical conclusion, to these great successful companies who already, by the balance-sheets published week after week, show that they have ample funds for development.
There is one other point with which I would like to deal because it arose out of certain articles which, I noticed, the mover of this Clause has been reading, and which I have been reading too. He used what I may call a psychological argument. He said that if you lower the Income Tax on these reserves it will encourage directors to increase the reserves and diminish the proportion of profits which they distribute. He referred to a series of articles in the "Economist."

Sir L. SCOTT: I only referred to an analysis of the returns of about one-third of the companies in order to get the ratio between the capital invested and the money put to reserve, and it is only 22 per cent. That was the only article to which I referred.

Mr. LEES-SMITH: I also have been reading that article with a number of others, and my conclusion is that that article, and the article which preceded it, show that even if you gave this concession it would not have any appreciable effect upon the amount of capital put aside to reserve. These articles in the "Economist" have collected, and give, the figures of a selection of the largest companies five years before the War and five years after the War. Those figures show that, quoting the figure of the Mover, these companies for the five years before the War put to reserve about
2.3 per cent. of their capital, and for the five years after the War they put to reserve about 2.2 per cent. of their capital. That means that, in spite of the enormous changes in trade and in industrial conditions between the period before and after the War, and in spite of the difference between the Income Tax before the War and after the War, and in spite of those revolutionary distinctions, the proportion of money put to reserve has remained identical throughout the whole period. In those circumstances, it is clear that this Clause would have no appreciable effect in altering the distribution between profits and reserve, but would put millions of pounds into the hands of the wealthiest companies in the land, and for no practical object.

Mr. BASIL PETO: I rise to support the contention that these two Clauses have a very close relationship to an Amendment which I moved, and on which the Chancellor of the Exchequer gave a definite promise closely to investigate the matter. The right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) spoke just now on the question of an adequate depreciation being allowed for wasting assets and obsolescent machinery. I do not know to what extent the Mover of the Amendment regards the arguments from the Treasury Bench as really relevant to the Clause, but I do feel, particularly in view of the speech of the right hon. Member for Norwich (Mr. Young), that very likely they will come to the conclusion, to which I have come, that the only safe way of giving any direct assistance to productive industry is to see, not that you do something to encourage thrift which may be a very much wider application than what is intended, but that you follow on the lines of the Report of the Royal Commission, so that you shall collect your tax upon industry upon the true profits of the industry, and not upon money which ought to be, and must be, in any properly managed business, used not for distribution but for the restoration and replacement of obsolescent assets and for dealing with the diminishing capital value of mining assets to which particular reference has been made.
I do not believe that on those lines we shall get so many of the complaints which have wrecked these Amendments this afternoon. There is no question of intro-
ducing a new principle of taxation at all, but there is urgent need for a full investigation of that question, so that the exact cost may be ascertained, and so that, when next the Chancellor of the Exchequer is able to make some remission of Income Tax, he will make it directly on the productive industry of the country so as to increase employment in those industries. Therefore, I hope not only that the Financial Secretary will carry out his promise to look into the question underlying these two Amendments, but that he will, having looked into it, find on making that investigation that the easiest and sanest mode of doing something for the productive industry of the country and increase employment is on the lines of dealing with the wasting and obsolescent assets question, and seeing that the Income Tax is charged on the true profits of industry in future.

Sir L. SCOTT: In view of the promise given from the Front Bench that this matter will be fully investigated during the ensuing financial year, and before next year's Budget, I beg to ask leave to withdraw the Clause. [HON. MEMBERS: "No!"]

Sir PATRICK HASTINGS: I do think that before the House considers the possibility of withdrawing this Clause attention should be called to the very remarkable, and I must say the pitiful, changes which we have all witnessed in regard to this matter, because, though no one is surprised at slight divergences in the opinions held by hon. Members as they change from one side of the House to the other, yet to-day we have had an example which, I think, is not within the experience of hon. Members. Last year I sat where the Financial Secretary is sitting now, by the side of the then Financial Secretary, and the Minister of Health got up in his place and from this very Box introduced, against us, this very Clause in substance, the principle being precisely the same as this one introduced to-day, we being then in a hopeless minority in this House. That was put forward with all the weight of the financial knowledge of the Conservative party. We were in a hopeless minority and might have been defeated on our Budget. The Liberal party came to our assistance. The Conservative party with all their financial knowledge were unable to persuade the House that this Clause was the one which the country needed.
To-night the right hon. Gentleman (Sir A. Mond) got up in his place and proposed the very principle in opposition to which the Liberal party came to our support last year, and no sooner had he done it than the Financial Secretary got up in his place and said that the proposal backed by the right hon. Gentleman was a revolutionary proposal in finance, and no sooner had he said that than the hon. Member for the Moseley Division of Birmingham (Mr. Hannon) got up in his place and said that it was now becoming generally believed throughout the country that the Conservative Government were opposed to the great financial interests of the country, and that the Financial Secretary had confirmed that view by his speech to-night, whereupon the Financial Secretary arose again and expressed his regret that he had been so misunderstood, and offered the most sympathetic consideration to the revolutionary proposal of the Liberal Member which the Labour Government had opposed so strongly last year.
Where are we? The House wants to know where the Financial Secretary ought to be sitting? If we were sitting there the Conservative Government would be opposing us for not introducing this proposal, and when they are sitting there, and the Liberal party are supporting it, they say that it is a revolutionary proposal. I am certain that anyone coming to this House for the first time this afternoon, and learning these facts, would be pardoned for thinking that "Alice in Wonderland" is nearer reality than is generally imagined, though who would be selected as the Mad Hatter I do not know. It does not end there, because, as I am sure the country knows—at least my constituents were told so at the last Election—the Conservative Government, if they are anything, are magnates in finance. Two nights ago the Chancellor of the Exchequer standing there decreased Income Tax, because he said, in spite of our protest, that industry wanted capital, and to-night, when the right hon. Gentleman got up to support this proposal, the Financial Secretary arose in his place and said, "Is it true that industry wants capital? No." Again, where are we? Who is right? I, as a humble Member of this House and not a financier, would like to know. Does industry want capital or does it not? Perhaps we had better wait until
the Chancellor of the Exchequer returns in order that he may tell us. I thought the Conservative Government took the view that industry wanted capital. The hon. Member for Norwich (Mr. H. Young) has told us that it does not; the right hon. Member for Carmarthen (Sir A. Mond) says that it does. Again, who is right? We on the Labour benches know nothing. I hope that some time before this monumental Budget finds its resting place in the archives of the House, we may have an answer to one or two very simple questions. Does industry want capital, or does it not? Is the Government considering this proposal, or is it not? Which is the revolutionary party, the Liberal party or the Conservative party?

Question put, "that The Clause be read a Second time."

The House proceeded to a Division; but there being no Members willing to act as Tellers for the Ayes,

Mr. Speaker declared the Noes had it.

Mr. LANSBURY: On a point of Order. Did you, Mr. Speaker, put the Question, "That the Clause be read a Second time?" Here we were under the impression that you were putting the Question that leave be given to withdraw the Clause.

Mr. SPEAKER: The House refused leave to withdraw the Clause. Therefore, the only course open was to negative the Clause. The Clause has been negatived. The next Amendment that I select is a new Clause relating to "Allowance for travelling expenses."

NEW CLAUSE.—(Allowance for travelling expenses.)

In charging, whether under Schedule D the profits or gains accruing from any trade, profession, employment, or vocation, or under Schedule E the salary, fees, wages, or profits accruing from any office of employment, any person the amount of whose earned income, as estimated in accordance with the Income Tax Acts, shall not exceed five hundred pounds, such deduction may be allowed as the Commissioners, having jurisdiction in the matter, may consider just and reasonable as representing the expenses of travelling between the residence of the taxpayer and his place of business, provided that no such deduction shall exceed the sum of twenty pounds.—[Captain Garro-Jones.]

Captain GARRO-JONES: I beg to move, "That the Clause be read a Second time."
This is not a Clause which I would have preferred to other Clauses to which my name is also attached, but that does not mean that I am at all dubious as to the merits of this Clause. I am encouraged to hope that we may have some concession from the Treasury, for two or three reasons. The first is that, so far as time is concerned, this Debate is getting on pretty rapidly. We are already about three-quarters of an hour ahead of the programme. I do not propose to absorb that gain in time, but I hope it will encourage the Financial Secretary to give us some concession. I have observed that the Chancellor of the Exchequer is very ready to meet the pressing claims of people like large owners of agricultural land and silk manufacturers, but I have not noticed hitherto that he has shown any tendency to make any concession to the small taxpayer who has no powerful trade union or employers' organisation to support him. I am aware that the Financial Secretary probably has in his hand the stock Treasury answer to this Amendment, but I hope that that will not prevent him from giving consideration to the Amendment. This is an appeal on behalf of a large number of people who may briefly be described as straphangers and other victims of the Southern Railway. I am not wedded to the exact wording of the Amendment It seeks to exempt from taxation the amount paid in travelling expenses by people, possessing incomes of less than £500 a year, who pay a sum not exceeding £20 for travelling expenses. I shall not object if the Financial Secretary wishes to increase the amount of exemption or to increase the limit of travelling expenses, but I hope that he will make some concession.
The first argument in favour of the Clause is undoubtedly that it encourages people to live outside the crowded urban districts. If it is proper to grant relief of Income Tax for people who pay insurance premiums, it is surely desirable to make concessions to people who promote their health by living in the rural areas. They live in those areas, not merely for health or luxury, but because they are compelled to do so, the housing accommodation within easy reach of London being totally inadequate to meet the demand. I will give the Financial Secretary very briefly the charges for season tickets for people who
wish to live outside London. A season ticket to Eastbourne, third class, costs £32 10s. a year. My Clause would not give a man full benefit for living at Eastbourne. It would give him the benefit only of a 20 miles radius, about as far as Caterham, the season ticket for which costs £20 per annum. In the new scale for season tickets proposed by the railway companies, the 20 miles radius season ticket is to cost £21 10s., third class; £18 10s., third class, within a 15 miles radius; and £14, third class, within a 10 miles radius. Those charges express approximately the extent to which the Financial Secretary would have to grant relief.
The chief argument used against this Clause last year by the then Chancellor of the Exchequer was that the Royal Commission on Income Tax had opposed this relief on the ground that it trenched on the question of rent and rates. I hope that that argument will not prove conclusive with the present Chancellor, because the principle has already been conceded in other directions. A doctor has his travelling expenses allowed, a barrister gets allowance for his chambers and his clerk and the renewal of books, and ministers and other professional men get allowances for studies and other parts of a house which would otherwise be chargeable to Income Tax. Travelling expenses are paid to people who can afford to travel in taxi-cabs. For instance, journalists can get an allowance for travelling about London in taxi-cabs, in carrying out their duties, if they make a special claim. It is an equitable claim. I certainly think that the hundreds of thousands who come up to London every day in the tubes and trains ought to be allowed relief for their travelling expenses. I have been amazed to see these people often spending two hours or an hour-and-a-half of every working day in travelling up and down, to and from their work They get no pay for that time. On the contrary, they are contributing to the dividends of the Underground and other railway companies. I hope that the Financial Secretary will examine the proposal with an impartial eye.

Mr. P. HARRIS: I wish to support the new Clause. The name of the Financial Secretary has always been associated with housing reform. Both he and his family
have been great advocates of improved housing of the people. Our great towns are getting too large. They are spreading out over such immense areas that great numbers of the population are out of contact with rural life. Every housing reformer has come to the conclusion that the right path to take in housing progress is to limit our big cities and to induce people to live in the country. Unfortunately that entails expense. A railway season ticket is often a big tax on the family budget. The heavy charge entailed for railway travelling prevents many people from going out to the country estates which are being developed by municipalities. Here is an opportunity for the Government and the Chancellor to give a little encouragement to people to live out in the country, and away from the crowded centres of population, which in the end must have a considerable effect on the health of the nation.

Mr. GUINNESS: The proposal to give this allowance for travelling expenses is a much more costly matter than the Mover and Seconder seem to imagine. It would involve us in a loss of £800,000 in a full year. It is not merely on that ground, however, that I ask the House to reject the new Clause, but also because we believe it would bring about an unequal and unfair differentiation between one class of taxpayers and another, on quite haphazard and accidental grounds. The hon. and gallant Gentleman who moved the Second Reading of the New Clause referred to the recommendation of the Royal Commission with disapproval, but I am afraid in spite of that fact I must again tell the House what that recommendation was. The Royal Commission on Income Tax, expressed the following view:
Travelling expenses incurred by a taxpayer in going from his place of residence to his business should not, in our view, be allowed. The question of travelling expenses is one which reacts on other private expenses, such as the expenditure for rent and rates. It is more truly an expenditure or disposal of income than an expense essentially necessary to earn the income. We are of opinion that a general allowance for travelling expenses would result in very grave inequity.
I think if the hon. Member for South West Bethnal Green (Mr. Harris) considers the matter a little further, he will see that his argument as regards housing
is not conclusive. As he knows well from his experience of dealing with housing in London, certain people have to live in crowded areas where rents are high because of the conditions of their employment. It would not be fair that such people should get no remission in spite of their high rents, whereas people who pay lower rents should because of the necessity for daily travel between their work and homes receive this advantage. Railway travelling and rent work in so closely together that to give this remission merely on chance, and to leave untouched people who are compelled to pay high rents in crowded areas would cause a great and real grievance.

Captain GARRO-JONES: The people who live in crowded areas do not pay Income Tax.

Mr. GUINNESS: Yes, some of them do. The hon. and gallant Member has limited his proposal to people whose incomes are up to £500 a year, and I think he will find that quite a number of such people are compelled to live close to the place where they work. Reference has also been made to the case of doctors. The hon. and gallant Member is not perhaps aware of the rules under which doctors and the other professional people whom he mentioned get this exemption. They get it because their travelling is wholly necessarily and exclusively incurred in the performance of their duties. A doctor would not get allowance for travelling from his consulting room down to the country on a season ticket. Once you get away from that rule, you are liable to get into great difficulty. Apart from these considerations an injustice would, I think, arise under a proposal which would limit a remission of Income Tax to those who are in enjoyment of an earned income of not more than £500. It would mean that many rich people who have investments, and who perhaps earn an income of £200 a year, out of a couple of directorships of companies, would get the remission, while other people who are dependent upon an earned income which is just over £500 would be deprived of the advantage. For those reasons I think the Clause would be very uneven in its operation and I cannot advise the House to accept it.

Mr. SPENCER: On both of the grounds on which the right hon. Gentleman rejects this New Clause, I could make out
a good case for many workmen in this country. The right hon. Gentleman bases his objection to the New Clause firstly on the ground that those who are living in the country pay less rent and less rates than those living in the towns. What about the men who have to go from the towns to the country to work, and who pay high rents in the towns in addition to the cost of travelling? In the whole of the mining area the case is absolutely the reverse to that put by the right hon. Gentleman. Men who work in the country districts have to live in the towns

because there is little or no housing accommodation in the country. Nor does the other objection raised by the right hon. Gentleman apply to men in this position. There is no necessity for them to go to the country except to go to their work. Thousands of miners have to travel in this way at the present time, and the cost to them now is 200 per cent. higher than it was in pre-War times.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 117; Noes, 298.

Division No. 194.]
AYES.
[6.53 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Harris, Percy A.
Scrymgeour, E.


Adamson, W. M. (Staff., Cannock)
Hayday, Arthur
Sexton, James


Alexander, A. V. (Sheffield, Hillsbro')
Hayes, John Henry
Shaw, Rt. Hon. Thomas (Preston)


Ammon, Charles George
Henderson, Rt. Hon. A. (Burnley)
Short, Alfred (Wednesbury)


Attlee, Clement Richard
Henderson, T. (Glasgow)
Simon, Rt. Hon. Sir John


Baker, J. (Wolverhampton, Bilston)
Hirst, G. H.
Smillie, Robert


Barker, G. (Monmouth, Abertillery)
Hirst, W. (Bradford, South)
Smith, Ben (Bermondsey, Rotherhithe)


Barnes, A.
Hore-Belisha, Leslie
Smith, H. B. Lees (Keighley)


Batey, Joseph
Hudson, J. H. (Huddersfield)
Smith, Rennie (Penistone)


Benn, Captain Wedgwood (Leith)
Jenkins, W. (Glamorgan, Neath)
Snell, Harry


Bowerman, Rt. Hon. Charles W.
John, William (Rhondda, West)
Spencer, George A. (Broxtowe)


Broad, F. A.
Johnston, Thomas (Dundee)
Stamford, T. W.


Bromley, J.
Jones, Henry Haydn (Merioneth)
Stephen, Campbell


Charleton, H. C.
Jones, Morgan (Caerphilly)
Button, J. E.


Cluse, W. S.
Jones, T. I. Mardy (Pontypridd)
Taylor, R. A.


Clynes, Rt. Hon. John R.
Kelly, W. T.
Thomas, Rt. Hon. James H. (Derby)


Connolly, M.
Kennedy, T.
Thomson, Trevelyan (Middlesbro, W.)


Dalton, Hugh
Kenyon, Barnet
Thorne, G. R. (Wolverhampton, E.)


Day, Colonel Harry
Lansbury, George
Thorne, W. (West Ham, Plaistow)


Dennison, R.
Lawson, John James
Thurtle, E.


Duncan, C.
Livingstone, A. M.
Tinker, John Joseph


Dunnico, H.
Lowth, T.
Trevelyan, Rt. Hon. C. P.


Edwards, John H. (Accrington)
Lunn, William
Viant, S. P.


England, Colonel A.
Mackinder, W.
Walsh, Rt. Hon. Stephen


Evans, Capt. Ernest (Welsh Univer.)
MacLaren, Andrew
Warne, G. H.


Forrest, W.
Maclean, Nell (Glasgow, Govan)
Watson, W. M. (Dunfermline)


George, Rt. Hon. David Lloyd
March, S.
Watts-Morgan, Lt.-Col. D. (Rhondda)


Gillett, George M.
Maxton, James
Wedgwood, Rt. Hon. Josiah


Gosling, Harry
Montague, Frederick
Westwood, J.


Graham, D. M. (Lanark, Hamilton)
Morris, R. H.
Wheatley, Rt. Hon. J.


Greenall, T.
Morrison, R. C. (Tottenham, N.)
Whiteley, W.


Grenfell, D. R. (Glamorgan)
Naylor, T. E.
Williams, David (Swansea, East)


Griffiths, T. (Monmouth, Pontypool)
Palin, John Henry
Williams, T. (York, Don Valley)


Groves, T.
Paling, W.
Wilson, R. J. (Jarrow)


Grundy, T. W.
Parkinson, John Allen (Wigan)
Windsor, Walter


Guest, J. (York, Hemsworth)
Pethick-Lawrence, F. W.
Wright, W.


Guest, Dr. L. Haden (Southwark, N.)
Ponsonby, Arthur
Young, Robert (Lancaster, Newton)


Hall, F. (York, W. R., Normanton)
Potts, John S.



Hall, G. H. (Merthyr Tydvil)
Richardson, R. (Houghton-le-Spring)
TELLERS FOR THE AYES.—


Hardie, George D.
Saklatvala, Shapurji
Sir Robert Hutchison and Captain




Garro-Jones.


NOES.


Acland-Troyte, Lieut.-Colonel
Bellairs, Commander Carlyon W.
Brooke, Brigadier-General C. R. I.


Agg-Gardner, Rt. Hon. Sir James T.
Bennett, A. J.
Broun-Lindsay, Major H.


Albery, Irving James
Bentinck, Lord Henry Cavendish-
Brown, Brig.-Gen. H. C. (Berks, Newb'y)


Amery, Rt. Hon. Leopold C. M. S.
Berry, Sir George
Buckingham, Sir H.


Applin, Colonel R. V. K.
Betterton, Henry B.
Bull, Rt. Hon. Sir William James


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Bird, E. R. (Yorks, W. R., Skipton)
Bullock, Captain M.


Astor, Viscountess
Blades, Sir George Rowland
Burgoyne, Lieut.-Colonel Sir Alan


Atholl, Duchess of
Blundell, F. N.
Burman, J. B.


Baldwin, Rt. Hon. Stanley
Bourne, Captain Robert Croft
Burney, Lieut.-Com. Charles D.


Balfour, George (Hampstead)
Bowater, Sir T. Vansittart
Burton, Colonel H. W.


Balniel, Lord
Bowyer, Capt. G. E. W.
Butler, Sir Geoffrey


Banks, Reginald Mitchell
Boyd-Carpenter, Major A.
Cadogan, Major Hon. Edward


Barclay-Harvey, C. M.
Brass, Captain W.
Caine, Gordon Hall


Barnett, Major Richard
Bridgeman, Rt. Hon. William Clive
Campbell, E. T.


Beamish, Captain T. P. H.
Briscoe, Richard George
Cautley, Sir Henry S.


Beckett, Sir Gervase (Leeds, N.)
Brittain, Sir Harry
Cayzer, Sir C. (Chester, City)


Beckett, John (Gateshead)
Brocklebank, C. E. R.
Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)


Cazalet, Captain Victor A.
Henderson, Lieut.-Col. V. L. (Bootle)
Penny, Frederick George


Cecil, Rt. Hon. Sir Evelyn (Aston)
Heneage, Lieut.-Col. Arthur P.
Percy, Lord Eustace (Hastings)


Cecil, Rt. Hon. Lord H. (Ox. Univ.)
Henn, Sir Sydney H.
Perring, William George


Chadwick, Sir Robert Burton
Hennessy, Major J. R. G.
Peto, Basil E. (Devon, Barnstaple)


Chamberlain, Rt. Hn. J. A. (Birm. W.)
Henniker-Hughan, Vice-Adm. Sir A.
Pilcher, G.


Chamberlain, Rt. Hon. N. (Ladywood)
Herbert, Dennis (Hertford, Watford)
Pilditch, Sir Philip


Charteris, Brigadier-General J.
Herbert, S. (York, N. R-, Scar. & Wh'by)
Pownall, Lieut.-Colonel Assheton


Christie, J. A.
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Preston, William


Churchill, Rt. Hon. Winston Spencer
Hogg, Rt. Hon. Sir D. (St. Marylebone)
Price, Major C. W. M.


Churchman, Sir Arthur C.
Holbrook, Sir Arthur Richard
Rawlinson, Rt. Hon. John Fredk. Peel


Clarry, Reginald George
Homan, C. W. J.
Reid, Capt. A. S. C. (Warrington)


Clayton, G. C.
Hopkins, J. W. W.
Reid, D. D. (County Down)


Cobb, Sir Cyril
Hopkinson, A. (Lancaster, Mossley)
Remnant, Sir James


Cockerill, Brigadier-General G. K.
Horlick, Lieut.-Colonel J. N.
Rentoul, G. S.


Cohen, Major J. Brunel
Howard, Capt. Hon. D. (Cumb., N.)
Rhys, Hon. C. A. U.


Colfox, Major Wm. Phillips
Hudson, Capt. A. U. M. (Hackney, N.)
Richardson, Sir P. W. (Sur'y, Ch'ts'y)


Conway, Sir W. Martin
Hudson, R. S. (Cumberl'nd, Whiteh'n)
Roberts, Samuel (Hereford, Hereford)


Cooper, A. Duff
Hume, Sir G. H.
Ropner, Major L.


Cope, Major William
Hurst, Gerald B.
Ruggles-Brise, Major E. A.


Courtauld, Major J. S.
Hutchison, G. A. Clark (Midl'n & P'bl's)
Russell, Alexander West (Tynemouth)


Courthope, Lieut.-Col. Sir George L.
Inskip, Sir Thomas Walker H.
Samuel, A. M. (Surrey, Farnham)


Cowan, Sir Wm. Henry (Islington, N.)
Jackson, Lieut.-Colonel Hon. F. S.
Samuel, Samuel (W'dsworth, Putney)


Craig, Capt. Rt. Hon. C. C. (Antrim)
Jackson, Sir H. (Wandsworth, Cen'l)
Sandeman, A. Stewart


Craig, Ernest (Chester, Crewe)
Jacob, A. E.
Sanders, Sir Robert A.


Craik, Rt. Hon. Sir Henry
James, Lieut.-Colonel Hon. Cuthbert
Sanderson, Sir Frank


Croft, Brigadier-General Sir H.
Jephcott, A. R.
Sandon, Lord


Crook, C. W.
Jones, G. W. H. (Stoke Newington)
Sassoon, Sir Philip Albert Gustave D.


Crooke, J. Smedley (Deritend)
Joynson-Hicks, Rt. Hon. Sir William
Savery, S. S.


Crookshank, Col. C. de W. (Berwick)
Kennedy, A. R. (Preston)
Scott, Sir Leslie (Liverp'l, Exchange)


Crookshank, Cpt. H. (Lindsey, Gainsbro)
Kidd, J. (Linlithgow)
Shaw, Lt.-Col. A. D. Mcl. (Renfrew, W)


Curzon, Captain Viscount
Kindersley, Major Guy M.
Shaw, Capt. W. W. (Wilts, Westb'y)


Dalkeith, Earl of
King, Captain Henry Douglas
Sheffield, Sir Berkeley


Dalziel, Sir Davison
Kinloch-Cooke, Sir Clement
Simms, Dr. John M. (Co. Down)


Davidson, J. (Hertf'd, Hemel Hempst'd)
Lamb, J. Q.
Skelton, A. N.


Davidson, Major-General Sir John H.
Lane-Fox, Lieut.-Col. George R.
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Davies, Maj. Geo. F.(Somerset, Yeovi')
Leigh, Sir John (Clapham)
Smith-Carington, Neville W.


Dawson, Sir Philip
Lister, Cunliffe-, Rt. Hon. Sir Philip
Smithers, Waldron


Dean, Arthur Wellesley
Little, Dr. E. Graham
Somerville, A. A. (Windsor)


Dixon, Captain Rt. Hon. Herbert
Locker-Lampson, G. (Wood Green)
Spender Clay, Colonel H.


Doyle, Sir N. Grattan
Locker-Lampson, Com. O. (Handsw'th)
Sprot, Sir Alexander


Drewe, C.
Loder, J. de V.
Stanley, Lord (Fylde)


Eden, Captain Anthony
Looker, Herbert William
Stanley, Col. Hon. G.F. (Will'sden, E.)


Edmondson, Major A. J.
Lougher, L.
Stanley, Hon. O. F. G. (Westm'eland)


Elliot, Captain Walter E.
Lowe, Sir Francis William
Steel, Major Samuel Strang


Ellis, R. G.
Luce, Maj.-Gen. Sir Richard Harman
Storry Deans, R.


Elveden, Viscount
Lumley, L. R.
Stott, Lieut.-Colonel W. H.


Erskine, James Malcolm Monteith
MacAndrew, Charles Glen
Sueter, Rear-Admiral Murray Fraser


Erskine, Lord (Somerset, Weston-s.-M.)
Macdonald, Capt. P. D. (I. of W.)
Sykes, Major-Gen. Sir Frederick H.


Everard, W. Lindsay
McDonnell, Colonel Hon. Angus
Tasker, Major R. Inigo


Fairfax, Captain J. G.
Macintyre, I.
Thompson, Luke (Sunderland)


Falle, Sir Bertram G.
McLean, Major A.
Thomson, F. C. (Aberdeen, South)


Fanshawe, Commander G. D.
MacMillan, Captain H.
Thomson, Sir W. Mitchell-(Croydon, S.)


Fermoy, Lord
Macnaghten, Hon. Sir Malcolm
Tinne, J. A.


Fielden, E. B.
MacRobert, Alexander M.
Titchfield, Major the Marquess of


Finburgh, S.
Maitland, Sir Arthur D. Steel-
Tryon, Rt. Hon. George Clement


Fleming, D. P.
Makins, Brigadier-General E.
Turton, Edmund Russborough


Ford, P. J.
Malone, Major P. B.
Vaughan-Morgan, Col. K. P.


Forestier-Walker, L.
Manningham-Buller, Sir Mervyn
Waddington, R.


Foster, Sir Harry S.
Margesson, Captain D.
Wallace, Captain D. E.


Foxcroft, Captain C. T.
Marriott, Sir J. A. R.
Ward, Lt.-Col. A. L. (Kingston-on-Hull)


Fremantle, Lieut.-Colonel Francis E.
Mason, Lieut.-Col. Glyn K.
Warrender, Sir Victor


Ganzoni, Sir John
Meller, R. J.
Waterhouse, Captain Charles


Gates, Percy
Merriman, F. B.
Wells, S. R.


Gilmour, Lt.-Col. Rt. Hon. Sir John
Meyer, Sir Frank
White, Lieut.-Colonel G. Dairymple


Goff, Sir Park
Mitchell. Sir W. Lane (Streatham)
Williams, Com. C. (Devon, Torquay)


Gower, Sir Robert
Moles, Thomas
Williams, Herbert G. (Reading)


Grant, J. A.
Monsell, Eyres, Com. Rt. Hon. B. M.
Winby, Colonel L. P.


Greene, W. P. Crawford
Moore, Lieut.-Colonel T. C. R. (Ayr)
Windsor-Clive, Lieut.-Colonel George


Grenfell, Edward C. (City of London)
Moore-Brabazon, Lieut.-Col. J. T. C.
Winterton, Rt. Hon. Earl


Grotrian, H. Brent
Morrison, H. (Wilts, Salisbury)
Wise, Sir Fredric


Guest, Capt. Rt. Hon. F. E. (Bristol, N.)
Morrison-Bell, Sir Arthur Clive
Wolmer, Viscount


Guinness, Rt. Hon. Walter E.
Murchison, C. K.
Womersley, W. J.


Gunston, Captain D. W.
Nall, Lieut.-Colonel Sir Joseph
Wood, B. C. (Somerset, Bridgwater)


Hacking, Captain Douglas H.
Nelson, Sir Frank
Wood, Rt. Hon. E. (York, W.R., Ripon)


Hall, Capt. W. D'A. (Brecon & Rad.)
Newman, Sir R. H. S. D. L. (Exeter)
Wood, E. (Chest'r, Stalyb'ge & Hyde)


Hannon, Patrick Joseph Henry
Nicholson, O. (Westminster)
Wood, Sir Kingsley (Woolwich, W.).


Harland, A.
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.)
Wood, Sir S. Hill- (High Peak)


Harrison, G. J. C.
Nield, Rt. Hon. Sir Herbert
Woodcock, Colonel H. C.


Harvey, G. (Lambeth, Kennington)
Nuttall, Ellis
Worthington-Evans, Rt. Hon. Sir L.


Harvey, Major S. E. (Devon, Totnes)
Oakley, T.



Haslam, Henry C.
O'Connor, T. J. (Bedford, Luton)
TELLERS FOR THE NOES.—


Hawke, John Anthony
O'Neill, Major Rt. Hon. Hugh
Colonel Gibbs and Major Sir Harry


Headlam, Lieut.-Colonel C. M.
Ormsby-Gore, Hon. William
Barnston.


Henderson, Capt. R. R. (Oxf'd, Henley)
Pennefather, Sir John

NEW CLAUSE.—(Relief in respect of expenditure for the welfare of employés.)

Where any person shall, after the thirty-first day of December, nineteen hundred and eighteen, have expended any capital sum on buildings or equipment, or which shall be provided in pursuance of any Statute or Regulation, or which in the opinion of the General Commissioners shall be for the benefit of his employés, such person, in computing the amount of the profits or gains to be assessed to Income Tax in respect of his trade or business, may, after the passing of this Act, deduct such an amount as shall be equivalent to interest on such capital expenditure at the rate of 5 per cent. per annum.—[Mr. Trevelyan Thomson.]

Brought up, and read the First time.

Mr. TREVELYAN THOMSON: I beg to move, "That the Clause be read a Second time."
I submit that this Clause would do much to promote those excellent principles adumbrated by the Prime Minister in his speeches to help industry and give peace in our time. Therefore, I hope it will receive the sympathetic consideration of the Treasury Bench. In this nicely-balanced Budget of many conflicting claims we have had concessions to landlords, to brewers, to manufacturers of cars, lace and silk, and to special interests, but I submit that this particular Clause would give a widespread general interest and not be limited to one class or to one section of the community.
In our industrial development in recent years, there has been no more gratifying feature than the spread of welfare work, but, large as this has been, it might be much larger. If we turn to America, we find very much more progress is being made there than in this country. Whilst many men of generous impulses have done a great deal, the rate of progress in the extension of this magnificent organisation is not so great now as it was, and this Clause is based on the idea, of prompting and encouraging those who possibly have not so far taken the step of promoting recreation and dining rooms, and all those things connected with welfare work. It is surely one that will appeal to the interests and sympathies of this House. I do not know whether hon. Members have read a recent report by the Industrial Fatigue Research Committee, because it does stress the importance of the human factor and encourages organisations to spend more money in paying attention to the human side of industry.
I hope we shall not be met by the Treasury with the objection that this is capital expenditure and, therefore, does not fall under the claim for abatement of Income Tax. I submit that this expenditure is not for the sake of industry, but is rather in the nature of a voluntary charity. I submit there is good ground why expenditure on welfare work should be exempt.
I admit that the upkeep of welfare work is exempt from tax, but I submit also that that being so there is every reason why capital expenditure required for the development of welfare experiments should be exempt. Why, for instance, should an employer who is able to rent a hall or a club be allowed to charge that rent against legitimate reduction, whereas the employer who builds is not allowed to charge the interest on his capital. I submit that every interest—industry, the human factor, the public interest, and the Exchequer itself—would gain. The general well-being of the country and the general health of the country would be advantaged by the extension of this work. Therefore, the amount of money the Treasury pays for unemployment or health insurance would be less if we had a vigorous campaign throughout the country on behalf of this work. I think the Treasury should show considerable sympathy for this work. I do not know what the cost would be, but I cannot think that the amount would be large. Be it large or small, I submit this money would be very well spent and far better spent than on some of the abatements which we have passed by large majorities in the House. I have no doubt this proposal will meet not only with the support of the hon. Member for Moseley (Mr. Hannon) but with the support of other members of the Conservative party and others. It is not a party question, but it is one advocated by all the various sections of the House. Now is an opportunity for the Government to give effect to what I am sure is largely the unanimous view of this House.

Mr. E. EVANS: I beg to second the Motion.
I must confess that one time I had a little doubt as to whether this relief should be granted, but on that point I have been converted by the speech which the hon. Member for Moseley (Mr. Hannon) made in submitting last year a
similar Amendment, if not in the precise terms of those of the Amendment which stands on the Paper in the name of my hon. Friend the Member for West Middlesbrough (Mr. T. Thomson), who has just spoken, when he pointed out that some inducement ought to be offered to those who have not the same generous conception of their public responsibilities as those who have already undertaken this work. It is intended merely to bring within the fold those who have not taken a share in this work that my hon. Friend has moved the Clause. I think it deserves the consideration of the Government on the ground that it will encourage employers of labour to spend money on schemes which undoubtedly are of benefit to their employés, and, because of that, are also of benefit to industry at large in this country. My hon. Friend has already said that in recent years a great deal has been done by employers throughout the country to improve the conditions under which their employés have to carry out their duties. I am quite prepared to admit that is to the credit of the employers, but, incidentally, I would also point out that while it is to their credit it is also to their benefit, because I am quite sure of this, that by improving the conditions under which those who are engaged in manual and physical work they are encouraged properly to perform their duties, and you are undoubtedly adding to the efficiency of the way in which the industry is being carried on.
It has been said by the Prime Minister on more than one occasion that one of the great things needed at the present time is to humanise industry. Everybody who is interested in the social development of this country will agree that the more we can do towards improving the conditions under which our people have to work, the better it is not only for the health of the community but also for the efficiency of the community, and for the efficiency of industry as well. At the present time, under this very Finance Bill, or the Pensions Bill associated with it, proposals are being put forward by the Government which undoubtedly will add considerably to the burdens which are cast upon industrial companies and persons engaged in industry and in business in this country. That being so, it seems to me the Chancellor of the Exchequer would be well advised
to compensate to some extent for those new burdens he is imposing by granting this relief, which is but a very small relief. It only asks for exemption at 5 per cent. on the capital expenditure incurred for the purpose, but, by conceding that small concession, he will demonstrate his desire to encourage every effort to humanise industry and to add to the amenities under which a great class of this country have to carry on.

Mr. HANNON: I have very much pleasure in supporting the New Clause. One of the most interesting developments in industrial organisation in this country during the past few years has been the amount of interest which has attached to the welfare movement, of which, I am proud to say, a distinguished member of the Royal family is at the head. During the past 10 or 12 years it has been regarded in this country as of profound importance that employers should not merely do what they could, in the way of wages and conditions of labour, to help those engaged in the various enterpriser for which they were responsible, but that they should also assist in promoting all that kind of recreational and educational effort which is so essential to the physical and intellectual well-being of their employés in our vast and complex industrial system. I am very proud indeed that my two hon. Friends opposite, as representing the powerful Liberal party in this House, have put this New Clause on the Paper, because I am certain that, in promoting the interests of the welfare movement in this country, we shall have the continued practical and constructive sympathy of the hon. Members on the other side of the House.
It is the fact that in this country a good many employers have shown great public spirit in organising, for the benefit of their workpeople, recreational and instructional schemes, while other employers, it must be admitted, have not seen their duty quite from the same angle, and I think we ought to recognise that, where you find in this country that employers do invest their money in capital undertakings for the benefit of their employés, some such consideration should be given by the Government as this small concession in relation to the Income Tax. It is a very small thing to ask from the Treasury. I am not now speaking in the same somewhat heated language that I
used towards my right hon. Friend in my previous speech; I am speaking now with all the kindly appeal of one Irishman to another. This welfare movement has the most far-reaching effects, not merely on the efficiency of industry, but upon that permanent harmony and peace in industry in this country which we are all seeking and towards the attainment of which you, Mr. Speaker, played a distinguished part before you occupied your present exalted position in this House.
I think this Clause must appeal to every Member of this House. We are all anxious that these wage-earning classes should move and have their being in the most congenial atmosphere possible. The Conservative party have always been the protagonists of the interests of the working classes, and we are now the protagonists of the interests of the working classes. I hope the Conservative party in this House, vis-à-vis the new Clause which has been moved by the hon. Member for West Middlesbrough (Mr. Thomson), will vindicate its claim to that distinction by having the Clause accepted by the Financial Secretary, as an indication of the desire of the Government to help this welfare movement. The movement has made great progress in this country in the past few years. It has the patronage of everybody who cares for the welfare of the community, and I sincerely hope that this House will put its hall-mark on this valuable national purpose by accepting the new Clause.

Mr. GUINNESS: The hon. Member for Moseley (Mr. Hannon) has just appealed to the Treasury to consider this Clause on other than financial grounds. In

this matter the Treasury, or rather the Inland Revenue, have shown very great consideration for the welfare work which the hon. Members who are supporting this Clause have at heart. It might not have been gathered from the discussion this evening, but, although there is nothing in our Statutes dealing with this movement, as a matter of fact, the Inland Revenue are in the habit of allowing welfare expenditure as a trading expense. I do not suppose anybody has ever questioned their generous interpretation of the Statute in this matter, but, as a fact, they have extended this advantage by their own volition and without any prompting from the House of Commons, and I really think this matter is satisfactorily dealt with on the revenue basis. The whole of our Income Tax practice is based on the complete exclusion of capital expenditure or income from capital from any consideration in assessing Income Tax, and, on the widest grounds, I should deplore any breach in that fundamental principle of our Income Tax law. Of course, if it had been shown that welfare work were really at a standstill owing to the existing state of the law, it might be our duty to make a breach in the existing practice, but no such evidence has been brought forward. For these reasons, I ask the House not to accept the Clause, which I think is unnecessary, in view of the existing practice of the Inland Revenue.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 118; Noes, 286.

Division No. 195.]
AYES.
[7.23 p.m.


Adamson, Rt. Hon. W. (File, West)
Dennison, R.
Hayes, John Henry


Adamson, W. M. (Staff., Cannock)
Doyle, Sir N. Grattan
Henderson Rt. Hon. A. (Burnley)


Alexander, A. V. (Sheffield, Hillsbro')
Duncan, C.
Henderson, T. (Glasgow)


Ammon, Charles George
Edwards, John H. (Accrington)
Hirst, G. H.


Attlee, Clement Richard
England, Colonel A.
Hirst, W. (Bradford, South)


Baker, J. (Wolverhampton, Bilston)
Evans, Capt. Ernest (Welsh Univer.)
Hore-Belisha, Leslie


Barker, G. (Monmouth, Abertillery)
Forrest, W.
Hudson, J. H. (Huddersfield)


Barnes, A.
Garro-Jones, Captain G. M.
Jenkins, W. (Glamorgan, Neath)


Batey, Joseph
Gillett, George M.
John, William (Rhondda, West)


Beckett, John (Gateshead)
Gosling, Harry
Johnston, Thomas (Dundee)


Benn, Captain Wedgwood (Leith)
Graham, D. M. (Lanark, Hamilton)
Jones, Henry Haydn (Merioneth)


Bowerman, Rt. Hon. Charles W.
Greenall, T.
Jones, Morgan (Caerphilly)


Broad, F. A.
Grenfell, D. R. (Glamorgan)
Jones, T. I. Mardy (Pontypridd)


Bromley, S.
Griffiths, T. (Monmouth, Pontypool)
Kelly, W. T.


Buckingham, Sir H.
Groves, T.
Kennedy, T.


Charleton, H. C.
Grundy, T. W.
Kenyon, Barnet


Cluse, W. S.
Guest, J. (York, Hemsworth)
Lansbury, George


Clynes, Rt. Hon. John R.
Hall, F. (York, W.R., Normanton)
Lawson, John James


Collins, Sir Godfrey (Greenock)
Hall, G. H. (Merthyr Tydvil)
Livingstone, A. M.


Connolly, M.
Hannon, Patrick Joseph Henry
Lowth, T.


Dalton, Hugh
Harris, Percy A.
Lunn, William


Day, Colonel Harry
Hayday, Arthur
Mackinder, W.


Maclean, Neil (Glasgow, Govan)
Smillie, Robert
Walsh, Rt. Hon. Stephen


March, S.
Smith, Ben (Bermondsey, Rotherhithe)
Warne, G. H.


Maxton, James
Smith, H. B. Lees (Keighley)
Watson, W. M. (Dunfermline)


Montague, Frederick
Smith, Rennie (Penistone)
Watts-Morgan, Lt.-Col. D. (Rhondda)


Morrison, R. C. (Tottenham, N.)
Snell, Harry
Wedgwood, Rt. Hon. Josiah


Naylor, T. E.
Spencer, George A. (Broxtowe)
Westwood, J


Palin, John Henry
Stamford, T. W.
Whiteley, W.


Paling, W.
Stephen, Campbell
Williams, David (Swansea, East)


Parkinson, John Allen (Wigan)
Sugden, Sir Wilfrid
Williams, Herbert G. (Reading)


Pethick-Lawrence, F. W.
Sutton, J. E.
Williams, T. (York, Don Valley)


Ponsonby, Arthur
Taylor, R. A.
Wilson, R. J. (Jarrow)


Potts, John S.
Thomas, Rt. Hon. James H. (Derby)
Windsor, Walter


Richardson, R. (Houghton-le-Spring)
Thorne, G. R. (Wolverhampton, E.)
Wright, W.


Riley, Ben
Thorne, W. (West Ham, Plaistow)
Young, Robert (Lancaster, Newton)


Saklatvala, Shapurji
Thurtle, E.



Scrymgeour, E.
Tinker, John Joseph
TELLERS FOR THE AYES.—


Sexton, James
Trevelyan, Rt. Hon. C. P.
Sir Robert Hutchison and Mr. Trevelyan Thomson.


Shaw, Rt. Hon. Thomas (Preston)
Varley, Frank B.



Short, Alfred (Wednesday)
Viant, S. P.



NOES.


Acland-Troyte, Lieut.-Colonel
Cobb, Sir Cyril
Harvey, G. (Lambeth, Kennington)


Agg-Gardner, Rt. Hon. Sir James T.
Cockerill, Brigadier-General G. K.
Harvey, Major S. E. (Devon, Totnes)


Albery, Irving James
Cohen, Major J. Brunel
Haslam, Henry C.


Amery, Rt. Hon. Leopold C. M. S.
Colfox, Major Wm. Phillips
Hawke, John Anthony


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Cooper, A. Duff
Headlam, Lieut.-Colonel C. M.


Astor, Viscountess
Cope, Major William
Henderson, Capt. R. R. (Oxf'd, Henley)


Atholl, Duchess of
Courtauld, Major J. S.
Henderson, Lieut.-Col. V. L. (Bootle)


Baldwin, Rt. Hon. Stanley
Courthope, Lieut.-Col. Sir George L.
Heneage, Lieut.-Col. Arthur P.


Balfour, George (Hampstead)
Cowan, Sir Wm. Henry (Islington, N.)
Henn, Sir Sydney H.


Balniel, Lord
Craig, Capt. Rt. Hon. C. C. (Antrim)
Henniker-Hughan, Vice-Adm. Sir A.


Banks, Reginald Mitchell
Craig, Ernest (Chester, Crewe)
Herbert, Dennis (Hertford, Watford)


Barclay-Harvey, C. M.
Craik, Rt. Hon. Sir Henry
Herbert, S. (York, N. R., Scar. & Wh'by)


Barnett, Major Richard
Croft, Brigadier-General Sir H.
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.


Barnston, Major Sir Harry
Crook, C. W.
Hogg, Rt. Hon. Sir D. (St. Marylebone)


Beamish, Captain T. P. H.
Crooke, J. Smedley (Deritend)
Holbrook, Sir Arthur Richard


Beckett, Sir Gervase (Leeds, N.)
Crookshank, Col. C. de W. (Berwick)
Homan, C. W. J.


Bellairs, Commander Carlyon W.
Crookshank, Cpt. H. (Lindsey, Gainsbro)
Hopkins, J. W. W.


Bennett, A. J.
Curzon, Captain Viscount
Hopkinson, A. (Lancaster, Mossley)


Bentinck, Lord Henry Cavendish-
Dalkeith, Earl of
Horlick, Lieut.-Colonel J. N.


Berry, Sir George
Dalziel, Sir Davison
Howard, Capt. Hon. D. (Cumb., N.)


Bethell, A.
Davidson, Major-General Sir John H.
Hudson, Capt. A. U. M. (Hackney, N.)


Betterton, Henry B.
Davies, Maj. Geo. F. (Somerset, Yeovil)
Hudson, R. S. (Cumberl'nd, Whiteh'n)


Bird, E. R. (Yorks, W. R., Skipton)
Dawson, Sir Philip
Hume, Sir G. H.


Blades, Sir George Rowland
Dean, Arthur Wellesley
Hurst, Gerald B.


Blundell, F. N.
Dixon, Captain Rt. Hon. Herbert
Hutchison, G. A. Clark (Midl'n & P'bl's)


Boothby, R. J. G.
Drewe, C.
Inskip, Sir Thomas Walker H.


Bourne, Captain Robert Croft
Eden, Captain Anthony
Jackson, Lieut.-Colonel Hon. F. S.


Bowater, Sir T. Vansittart
Edmondson, Major A. J.
Jackson, Sir H. (Wandsworth, Cen'l)


Bowyer, Capt. G. E. W.
Elliot, Captain Walter E.
Jacob, A. E.


Boyd-Carpenter, Major A.
Ellis, R. G.
James, Lieut.-Colonel Hon. Cuthbert


Brass, Captain W.
Elveden, Viscount
Jephcott, A. R.


Bridgeman, Rt. Hon. William Clive
Erskine, Lord (Somerset, Weston-s.-M.)
Jones, G. W. H. (Stoke Newington)


Briscoe, Richard George
Erskine, James Malcolm Monteith
Joynson-Hicks, Rt. Hon. Sir William


Brocklebank, C. E. R.
Everard, W. Lindsay
Kennedy, A. R. (Preston)


Brooke, Brigadier-General C. R. I.
Fairfax, Captain J. G.
Kidd, J. (Linlithgow)


Broun-Lindsay, Major H.
Falle, Sir Bertram G.
Kindersley, Major Guy M.


Brown, Brig.-Gen. H. C. Berks, Newb'y)
Fermoy, Lord
King, Captain Henry Douglas


Bull, Rt. Hon. Sir William James
Fielden, E. B.
Kinloch-Cooke, Sir Clement


Bullock, Captain M.
Finburgh, S.
Lamb, J. Q.


Burgoyne, Lieut.-Colonel Sir Alan
Fleming, D. P.
Lane-Fox, Lieut.-Col. George R.


Burman, J. B.
Ford, P. J.
Leigh, Sir John (Clapham)


Burney, Lieut.-Com. Charles D.
Forestier-Walker, L.
Lister, Cunliffe-, Rt. Hon. Sir Philip


Burton, Colonel H. W.
Foster, Sir Harry S.
Little, Dr. E. Graham


Butler, Sir Geoffrey
Foxcroft, Captain C. T.
Locker-Lampson, Com. O. (Handsw'th)


Cadogan, Major Hon. Edward
Ganzoni, Sir John
Loder, J. de V.


Caine, Gordon Hall
Gates, Percy
Looker, Herbert William


Campbell, E. T.
Gibbs, Col. Rt. Hon. George Abraham
Lougher, L.


Cassels, J. D.
Gilmour, Lt.-Col. Rt. Hon. Sir John
Luce, Maj.-Gen. Sir Richard Harman


Cautley, Sir Henry S.
Goff, Sir Park
Lumley, L. R.


Cayzer, Sir C. (Chester, City)
Grant, J. A.
MacAndrew, Charles Glen


Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)
Greene, W. P. Crawford
Macdonald, Capt. P. D. (I. of W.)


Cazalet, Captain Victor A.
Grenfell, Edward C. (City of London)
McDonnell, Colonel Hon. Angus


Cecil, Rt. Hon. Sir Evelyn (Aston)
Grotrian, H. Brent
Macintyre, I.


Cecil, Rt. Hon. Lord H. (Ox. Univ.)
Guest, Capt. Rt. Hon. F. E. (Bristrol, N.)
McLean, Major A.


Chadwick, Sir Robert Burton
Guest, Dr. L. Haden (Southwark, N.)
MacMillan, Captain H.


Chamberlain, Rt. Hn. J. A. (Birm., W.)
Guinness, Rt. Hon. Walter E.
Macnaghten, Hon. Sir Malcolm


Chamberlain, Rt. Hon. N. (Ladywood)
Gunston, Captain D. W.
Maitland, Sir Arthur D. Steel-


Charteris, Brigadier-General J.
Hacking, Captain Douglas H.
Makins, Brigadier-General E.


Christie, J. A.
Hall, Lieut.-Col. Sir F. (Dulwich)
Malone, Major P. B.


Churchill, Rt. Hon. Winston Spencer
Hall, Capt. W. D'A. (Brecon & Rad.)
Manningham-Buller, Sir Mervyn


Churchman, Sir Arthur C.
Harland, A.
Margesson, Captain D.


Clarry, Reginald George
Harrison, G. J. C.
Marriott, Sir J. A. R.




Mason, Lieut.-Col. Glyn K.
Remnant, Sir James
Sueter, Rear-Admiral Murray Fraser


Meller, R. J.
Rentoul, G. S.
Sykes, Major-Gen. Sir Frederick H.


Merriman, F. B.
Rhys, Hon. C. A. U.
Tasker, Major R. Inigo


Meyer, Sir Frank
Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Thompson, Luke (Sunderland)


Milne, J. S. Wardlaw-
Roberts, Samuel (Hereford, Hereford)
Thomson, F. C. (Aberdeen, South)


Mitchell, Sir W. Lane (Streatham)
Ruggles-Brise, Major E. A.
Thomson, Sir W. Mitchell- (Croydon, S.)


Moore, Lieut.-Colonel T. C. R. (Ayr)
Russell, Alexander West (Tynemouth)
Tinne, J. A.


Moore, Sir Newton J.
Salmon, Major I.
Titchfield, Major the Marquess of


Moore-Brabazon, Lieut.-Col. J. T. C.
Samuel, A. M. (Surrey, Farnham)
Tryon, Rt. Hon. George Clement


Morrison, H. (Wilts, Salisbury)
Samuel, Samuel (W'dsworth, Putney)
Vaughan-Morgan, Col. K. P.


Morrison-Bell, Sir Arthur Clive
Sandeman, A. Stewart
Waddington, R.


Murchison, C. K.
Sanders, Sir Robert A.
Wallace, Captain D. E.


Nall, Lieut.-Colonel Sir Joseph
Sanderson, Sir Frank
Ward, Lt.-Col. A.L.(Kingston-on-Hull)


Nelson, Sir Frank
Sassoon, Sir Philip Albert Gustave D.
Warner, Brigadier-General W. W.


Newman, Sir R. H. S. D. L. (Exeter)
Savery, S. S.
Warrender, Sir Victor


Nicholson, O. (Westminster)
Scott, Sir Leslie (Liverp'l, Exchange)
Waterhouse, Captain Charles


Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.)
Shaw, Lt.-Col. A. D. Mcl. (Renfrew, W)
Wells, S. R.


Nuttall, Ellis
Shaw, Capt. W. W. (Wilts, Westb'y)
White, Lieut.-Colonel G. Dairymple


Oakley, T.
Sheffield, Sir Berkeley
Williams, Com. C. (Devon, Torquay)


O'Connor, T. J. (Bedford, Luton)
Shepperson, E. W.
Winby, Colonel L. P.


O'Neill, Major Rt. Hon. Hugh
Simms, Dr. John M. (Co. Down)
Windsor-Clive, Lieut.-Colonel George


Oman, Sir Charles William C.
Skelton, A. N.
Wise, Sir Fredric


Ormsby-Gore, Hon. William
Smith, R. W. (Aberd'n & Kinc'dine, C.)
Wolmer, Viscount


Pennefather, Sir John
Smith-Carington, Neville W.
Womersley, W. J.


Penny, Frederick George
Smithers, Waldron
Wood, B. C. (Somerset, Bridgwater)


Percy, Lord Eustace (Hastings)
Somerville, A. A. (Windsor)
Wood, Rt. Hon. E. (York, W.R., Ripon)


Perring, William George
Spender Clay, Colonel H.
Wood, Sir Kingsley (Woolwich, W.).


Peto, Basil E. (Devon, Barnstaple)
Sprot, Sir Alexander
Wood, Sir S. Hill- (High Peak)


Pilditch, Sir Philip
Stanley, Col. Hon. G.F. (Will'sden, E.)
Woodcock, Colonel H. C.


Pownall, Lieut.-Colonel Assheton
Stanley, Lord (Fylde)
Worthington-Evans, Rt. Hon. Sir L.


Preston, William
Stanley, Hon. O. F. G. (Westm'eland)



Price, Major C. W. M.
Steel, Major Samuel Strang
TELLERS FOR THE NOES.—


Rawlinson, Rt. Hon. John Fredk. Peel
Storry Deans, R.
Commander B. Eyres Monsell and


Reid, Capt. A. S. C. (Warrington)
Stott, Lieut.-Colonel W. H.
Major Hennessy.


Reid, D. D. (County Down)
Strickland, Sir Gerald

NEW CLAUSE.—(Duties and drawbacks on tobacco.)

(1) In lieu of the duties of Customs payable on tobacco there shall, as from the first day of July, nineteen hundred and twenty-five, be charged, levied, and paid upon tobacco imported into Great Britain or Ireland the duties specified in Part I of the Sixth Schedule of this Act.

(2) In lieu of the Excise duties payable on tobacco grown in Great Britain or Northern Ireland, there shall, as from the first day of July, nineteen hundred and twenty-five, be charged, levied, and paid on tobacco grown in Great Britain or Northern Ireland the duties specified in Part II of the Sixth Schedule of this Act.

(3) Drawback allowed under Section one of the Manufactured Tobacco Act, 1863, as extended or amended by any subsequent Act, on tobacco exported from Great Britain or Northern Ireland or deposited in a bonded or King's warehouse shall, in cases where it is shown that the increased duties imposed by this Section have been paid, be allowed at the rates set out in Part III of the Sixth Schedule to this Act, instead of at the rates set out in the Second Schedule to the Finance Act, 1918, but subject to the provisions affecting allowance of drawback contained in the Schedule to the Finance Act, 1904.

(4) So much of Section one of the Manufactured Tobacco Act, 1863, as provides that drawback is not to be allowed on any tobacco unless the tobacco stalks therein contained have been fairly cut in the same with portions of the lamina of the leaf adhering thereto, and Section thirteen of the Tobacco Act, 1840, shall cease to have effect.—[Mr. Harris.]

Brought up, and read the First time.

Mr. HARRIS: I beg to move, "That the Clause be read a Second time."
I make no apology to the House for moving this Clause, but I would like to explain that if it had been possible to persuade the Chancellor of the Exchequer to give us considerable concessions on sugar and tea I would have preferred them. But the Tobacco Duty, the Financial Secretary will admit, is long overdue for revision. The total amount of unmanufactured tobacco imported in 1923 was 173,000,000 lbs., of which only 6 per cent. was imported from the Dominions beyond the seas. Though there has been small concessions made on Imperial tobacco, to satisfy the Imperial sentiment of the House, I think it will be generally admitted it is not going seriously to affect the price of tobacco. Seventy-five per cent. of the tobacco sold at the present time is sold in the form of cigarettes, and the Empire-imported tobacco does not to any extent affect the cigarette. At the most, it can be said to produce a special brand of Empire-grown tobacco, but the bulk of the tobacco sold is in the form of cigarettes, and any Empire tobacco mixed with those cigarettes is so small that it does not seriously affect the price.
The amount of duty paid on tobacco is immense. It is the largest source of revenue in indirect taxation. It is a diminishing source of revenue, obviously,
because of the high rate of tax. In 1920. £61,000,000 came from this source. In 1921, the amount was reduced to £55,500,000; in 1922, to £55,000,000; in 1923, to £53,000,000, and in 1924, to £51,980,000, the obvious result of making the tax so high. It may be said with some sort of reason that tobacco is a luxury, but the fact remains that, as our civilisation is organised at present, tobacco is an article in general use. Even though the price is high, it is one of the things—probably it is owing to the nerve strain of our civilisation—that the citizen is unable to deny himself. In the stress of our civilisation, especially in our great industrial cities, with the uncertainty of trade and the uncertainty of employment—for all the difficulties, tobacco has become almost a necessity of modern life. Certainly, the Prime Minister has set an example in the use of the homely pipe, which he has found a "guide, philosopher and friend" to help him lead the House and direct the affairs of Empire.
I would say to the Chancellor of the Exchequer it is time now to consider whether there should not be a downward revision in this very large tax. It is almost a penal tax, making tobacco a very expensive luxury. I have taken the trouble to find out the various amounts of tobacco used per thousand cigarettes. The ordinary "fag," as it is called, takes 2¾ lbs. per thousand, and the present duty is 22s. 6d. The duty on 100 cigarettes works out at 2s. 3d. On the ordinary packet of 10 for 6d., the duty works out at no less than 2½d., and I think I am right in saying, if the profit be added, it is not over-stating the figure to say that half the price of the ordinary packet of cigarettes takes the form of duty. Therefore, the smoker is contributing far more than his rightful burden to indirect taxation. A more important feature is that the expensive cigarette does not contribute more than the cheap one, because the tobacco is taxed by weight and not by price. While the smoker is paying through the nose, the manufacturer of tobacco is making immense profits. The combine has become rich beyond the dreams of avarice. Dividends are so frequently distributed and of such large amounts that it is almost impossible to keep pace
with them. Nor are these profits limited to the combine. Smaller rivals are paying immense dividends to shareholders, which seems to indicate that there is some call for revision of the whole scale of duties.
The question is, whether it would not be right and just, if the scale has to be revised, that some of the reduction should be borne by the manufacturers of tobacco in the same way as was done when the Beer Duty was revised. Of course, what is happening is that the manufacturers are making profit out of the duty, as they only pay the duty when they take the tobacco out of bond, and, therefore, are able to turn over their capital at an immense rate. When an inquiry was made into the business organisation of the tobacco industry, it was pointed out that they were constantly able to turn over their capital, and, therefore, though the profit on an individual packet was small, at the end of the year they were able to show immense profits. That, of course, is largely helped by the fact that a great part of their profits are obtained not on the article they sell, but on the duty which they pay. I, therefore, appeal to the Chancellor of the Exchequer to consider this tax, which is too high, and puts an exceptional burden on the smoking community as opposed to the rest of the population. Above all, it is a form of indirect taxation bringing in an immense revenue, and it does seem to call for some downward revision. It was increased enormously for War purposes, and I think we now have a right to ask that there should be some reduction, however small it may be, in the duty, so as to enable the ordinary consumer of tobacco to get his little comfort at a more reasonable figure.

Mr. MORRIS: I beg to second the Motion.
My hon. Friend has submitted that this tax is a tax upon a commodity that has ceased to be a luxury. I am afraid I cannot argue for tobacco quite as it was argued in the 16th century, when, I think, the case was put that it was an antidote for inordinate tea and beer drinking, and badly-ventilated houses. I believe it is true to say that the tobacconist shops of London were the only safe places during the great Plague of London. It is true that this commodity has undergone varying vicissitudes. I believe a very learned
article was written by James I as a counterblast against the use of tobacco, and I also believe it was an order by a Czar of Russia that those who were addicted to smoking should have their noses cut off, and, in some cases—I do not know what determined the extra degree of offence—they should have their heads cut off. Tobacco has also been recognised from time to time amongst the categories of sins, but that time has gone by, and, as my hon. Friend has pointed out, tobacco has become not a luxury, but an article consumed by the great bulk of the people.
One has only to compare the revenue of this article in 1843 and the present time. The revenue now is £51,000,000 as against something over £3,000,000 in 1843. That shows the extent to which tobacco is consumed. Although a useful source of revenue, the margin has been reached and passed where taxation is useful. Three or four years ago it yielded £61,000,000; last year it yielded only £51,000,000. I would say to the Chancellor of the Exchequer that by reducing this taxation he would increase the consumption, and thereby add to his sources of revenue. That is a policy we have long put forward from these benches. I should like, in this connection, to call the Chancellor's attention and that of the House to a Ministerial squib which was published in the 18th century, which contained the following:
They had learnt such a knack,
In the case of drawback,
For each pound of tobacco exported;
That the custom for two,
They drew back as their due,
By which they were greatly supported.
I hope the Chancellor of the Exchequer will see his way clear to make the concession asked for in the course of the appeal made by my hon. Friend.

Mr. GUINNESS: The proposal put forward by hon. Gentlemen opposite would mean that it would involve a loss of £8,000,000 in a full year on the Revenue, and £6,000,000 in the current year. The hon. Gentleman who moved very rightly said that the object of the Chancellor of the Exchequer in all these matters must be, firstly, the raising of Revenue. He admitted that the Tobacco Duty is a very valuable form of raising money, and that it is quite sound from a
Revenue point of view. In 1913–14 the consumption of tobacco was 98,000,000 pounds weight. Last year it was 128,000,000 pounds weight, in spite of the smaller area now covered in view of the exclusion of the Irish Free State. In spite, therefore, of the very heavy weight of taxation, the Tobacco Duty yield has kept up its splendid record as a Revenue-producer. In that it stands alone amongst the indirect sources of taxation. The Beer Duty, in spite of having been lowered, has not recouped us. Tobacco stands up undismayed by the weight of taxation. The scale consumption is on the up grade, and we hope to get an extra £1,000,000 this year as compared with last year.

Mr. GROVES: What about ladies smoking?

Mr. GUINNESS: I have no doubt that the ladies will contribute their share. In view of the fact that we in this matter must be primarily concerned with the Revenue, I must ask the House to turn down this proposal.

Lieut.-Commander BURNEY: Before the Financial Secretary finishes his observations, may I ask him one question? Whether, in view of the desirability of increasing the Revenue from tobacco, he will press upon the Home Secretary to allow tobacconists, where necessary, to stay open after eight o'clock? There are many people who cannot get to a tobacconist's until after eight o'clock, and I think the right hon. Gentleman would be doing a great service to the community as a whole if he would press upon the Home Secretary to waive the present Regulation.

Viscountess ASTOR: I hope very much that the Financial Secretary to the Treasury will not encourage the smoking of tobacco in any way. I am horrified at the great and good Liberal party opposite putting forward a scheme to encourage the smoking of tobacco. It is certainly an individual subject; but surely everyone who thinks at all knows that there is a great deal too much smoking for the good of the individual and for the good of the community, and I hope the Government will not consider opening the tobacconists later. The little Liberal party had better be very careful. If they go on at this rate they will lose a good
deal of the spiritual support throughout the country that is now given to them. It really is a new attitude on the part of the Liberal party, and one which distresses me greatly.

Major HORE-BELISHA: I rise to point out to my Noble colleague the Member for the Sutton Division of Plymouth that it is largely due to Elizabethan Plymouth that we have tobacco to-day. I do not know what Sir Walter Raleigh would have said had he known that in discovering Virginia he was going to produce so good an opponent of tobacco as we have seen in the Noble Lady this afternoon. It is a great pity the Noble Lady, coming from a constituency which has such fine Elizabethan traditions—[An HON. MEMBER: "And from Virginia too!"] Yes, and from Virginia, and connected as she is with one of the greatest discoveries of the Elizabethan era, should have thought fit to deplore and deprecate the use of tobacco. Seeing that the Noble Lady has refrained from putting the woman's point of view, I should like to put that point of view myself. The man's point of view has been admirably expressed by my hon. Friend the Member for South-West Bethnal Green (Mr. Harris). Seeing that the use of tobacco is growing amongst the ladies, and that the Chancellor of the Exchequer has been putting taxation upon silk—

Mr. B. SMITH: And their lace!

Major HORE-BELISHA: And their lace, by continuing the present incidence of this tax he is going to make life well nigh impossible. Not only are luxuries

burdened by the Treasury, but a simple necessity and a solace like tobacco is singled out for a special blow! I do want to plead with the Treasury to consider, not only the man's point of view, but the point of view which the hon. Member for Bethnal Green refrained from putting, namely, the woman's point of view. In these hard industrial times, so great is the strain placed, not only upon men, but women, that tobacco brings in its train consolation which is not to be derived from silk or lace, or any other thing of the sort. I myself, therefore, earnestly appeal to the Treasury to consider this Amendment, if not in this, in some other form.

Captain GARRO-JONES: May I put the suggestion as to whether it is not possible to transfer some of the duties of the cheaper kinds of tobacco to the more expensive kind? Some cigars cost 2d. and some cost 10d.; then you have the cheaper cigarettes and the more expensive kinds. Would it not be a practical proposition to put more duty on the expensive kinds of tobacco and less on the cheaper tobacco? I have great sympathy with the man who smokes his pipe, and shag. I think it is a splendid tobacco. People who smoke that tobacco derive as much pleasure from it as the people who smoke the more expensive kind. That tobacco, too, has the additional advantage that it encourages people to go into the open air. I sincerely hope that the Financial Secretary will seriously consider this suggestion of mine which will double the revenue.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 116; Noes, 272.

Division No. 196.]
AYES.
[8.0 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Dalton, Hugh
Hayes, John Henry


Adamson, W. M. (Staff., Cannock)
Day, Colonel Harry
Henderson, Rt. Hon. A. (Burnley)


Alexander, A. V. (Sheffield, Hillsbro')
Dennison, R.
Henderson, T. (Glasgow)


Ammon, Charles George
Duncan, C.
Hirst, G.H.


Attlee, Clement Richard
Edwards, John H.(Accrington)
Hirst, W. (Bradford, South)


Baker, J. (Wolverhampton, Bilston)
Evans, Capt. Ernest (Welsh Univer.)
Hore-Belisha, Leslie


Barker, G. (Monmouth, Abertillery)
Forrest, W.
Hudson, J.H. (Huddersfield)


Barnes, A.
Garro-Jones, Captain G.M.
Hutchison, Sir Robert(Montrose)


Batey, Joseph
Gillett, George M.
Jenkins, W. (Glamorgan, Neath)


Beckett, John (Gateshead)
Gosling, Harry
John, William (Rhondda, West)


Benn, Captain Wedgwood (Leith)
Graham, D. M.(Lanark, Hamilton)
Johnston, Thomas (Dundee)


Bowerman, Rt. Hon. Charles W.
Greenall, T.
Jones, Henry Haydn (Merioneth)


Broad, F. A.
Griffiths, T. (Monmouth, Pontypool)
Jones, Morgan (Caerphilly)


Bromley, J.
Groves, T.
Jones, T. I. Mardy (Pontypridd)


Charleton, H. C.
Grundy, T.W.
Kelly, W. T.


Cluse, W. S.
Guest, J. (York, Hentsworth)
Kennedy, T.


Clynes, Right Hon. John R.
Guest, Dr. L. Haden (Southwark, N.)
Kenyon, Barnet


Collins, Sir Godfrey (Greenock)
Hall, F. (York, W. R., Normanton)
Lansbury, George


Connolly, M.
Hall, G. H. (Merthyr Tydvil)
Lawson, John James


Cove, W. G.
Hayday, Arthur
Livingstone, A. M.


Lowth, T.
Shaw, Rt. Hon. Thomas (Preston)
Trevelyan, Rt. Hon. C. P.


Lunn, William
Short, Alfred (Wednesbury)
Varley, Frank B.


Mackinder, W.
Slesser, Sir Henry H.
Viant, S. P.


Maclean, Neil (Glasgow, Govan)
Smillie, Robert
Walsh, Rt. Hon. Stephen


March, S.
Smith, Ben (Bermondsey, Rotherhithe)
Watson, W. M. (Dunfermline)


Maxton, James
Smith, H. B. Lees- (Keighley)
Watts-Morgan, Lt.-Col. D. (Rhondda)


Montague, Frederick
Smith, Rennie (Penistone)
Webb, Rt. Hon. Sidney


Morrison, R. C. (Tottenham, N.)
Snell, Harry
Wedgwood, Rt. Hon. Josiah


Naylor, T. E.
Snowden, Rt. Hon. Philip
Westwood, J.


Palin, John Henry
Spencer, George A. (Broxtowe)
Whiteley, W.


Paling, W.
Stamford, T. W.
Williams, David (Swansea, E.)


Parkinson, John Allen (Wigan)
Stephen, Campbell
Williams, T. (York, Don Valley)


Pethick-Lawrence, F. W.
Sutton, J. E.
Wilson, R. J. (Jarrow)


Ponsonby, Arthur
Taylor, R. A.
Windsor, Walter


Potts, John S.
Thomas, Rt. Hon. James H. (Derby)
Wright, W.


Richardson, R. (Houghton-le-Spring)
Thomson, Trevelyan (Middlesbro. W.)
Young, Robert (Lancaster, Newton)


Riley, Ben
Thorne, G. R. (Wolverhampton, E.)



Roberts, Rt. Hon. F. O.(W. Bromwich)
Thorne, W. (West Ham, Plaistow)
TELLERS FOR THE AYES.—


Saklatvala, Shapurji
Thurtle, E.
Mr. Percy Harris and Mr. Morris.


Scrymgeour, E.
Tinker, John Joseph



NOES.


Acland-Troyte, Lieut.-Colonel
Cockerill, Brigadier-General G. K.
Harvey, G. (Lambeth, Kennington)


Agg-Gardner, Rt. Hon. Sir James T.
Cohen, Major J. Brunel
Harvey, Major S. E. (Devon, Totnes)


Albery, Irving James
Colfox, Major Wm. Phillips
Haslam, Henry C.


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Cooper, A. Duff
Hawke, John Anthony


Ashmead-Bartlett, E.
Cope, Major William
Henderson, Capt. R. R. (Oxf'd, Henley)


Astor, Viscountess
Courtauld, Major J. S.
Henderson, Lieut. Col. V. L. (Bootle)


Atholl, Duchess of
Cowan, Sir Wm. Henry (Islington, N.)
Heneage, Lieut.-Col. Arthur P.


Baldwin, Rt. Hon. Stanley
Craig, Ernest (Chester, Crewe)
Henn, Sir Sydney H.


Balfour, George (Hampstead)
Craik, Rt. Hon. Sir Henry
Henniker-Hughan, Vice-Adm. Sir A.


Balniel, Lord
Croft, Brigadier-General Sir H.
Herbert, Dennis (Hertford, Watford)


Banks, Reginald Mitchell
Crook, C. W.
Herbert, S. (York, N.R-, Scar. & Wh'by)


Barclay-Harvey, C. M.
Crooke, J. Smedley (Deritend)
Hogg, Rt. Hon. Sir D. (St. Marylebone)


Barnett, Major Richard
Crookshank, Col. C. de W. (Berwick)
Holbrook, Sir Arthur Richard


Beamish, Captain T. P. H.
Crookshank, Cpt. H. (Lindsey, Gainsbro)
Homan, C. W. J.


Bellairs, Commander Carlyon W.
Curtis-Bennett, Sir Henry
Hopkins, J. W. W.


Bennett, A. J.
Curzon, Captain Viscount
Hopkinson, A. (Lancaster, Mossley)


Bentinck, Lord Henry Cavendish-
Dalkeith, Earl of
Horlick, Lieut.-Colonel J. N.


Berry, Sir George
Dalziel, Sir Davison
Howard, Capt. Hon. D. (Cumb., N.)


Bethell, A.
Davidson, J. (Hertf'd, Hemel Hempst'd)
Hudson, Capt. A. U. M. (Hackney, N.)


Betterton, Henry B.
Davidson, Major-General Sir John H.
Hudson, R. S. (Cumberl'nd, Whiteh'n)


Bird, E. R. (Yorks, W. R., Skipton)
Davies, Maj. Geo. F. (Somerset, Yeovil)
Hume, Sir G. H.


Blades, Sir George Rowland
Dawson, Sir Philip
Hurst, Gerald B.


Blundell, F. N.
Dean, Arthur Wellesley
Hutchison, G.A. Clark (Midl'n & P'bl's)


Boothby, R. J. G.
Dixon, Captain Rt. Hon. Herbert
Inskip, Sir Thomas Walker H.


Bourne, Captain Robert Croft
Doyle, Sir N. Grattan
Jackson, Lieut.-Colonel Hon. F. S.


Bowater, Sir T. Vansittart
Drewe, C.
Jackson, Sir H. (Wandsworth, Cen'l)


Bowyer, Capt. G. E. W.
Eden, Captain Anthony
Jacob, A. E.


Boyd-Carpenter, Major A.
Edmondson, Major A. J.
James, Lieut.-Colonel Hon. Cuthbert


Brass, Captain W
Elliot, Captain Walter E.
Jephcott, A. R.


Bridgeman, Rt. Hon. William Clive
Ellis, R. G.
Jones, G. W. H. (Stoke Newington)


Briscoe, Richard George
Elveden, Viscount
Joynson-Hicks, Rt. Hon. Sir William


Brocklebank, C. E. R.
Erskine, Lord (Somerset, Weston-s.-M.)
Kennedy, A. R. (Preston).


Brooke, Brigadier-General C. R. I.
Everard, W. Lindsay
Kidd, J. (Linlithgow)


Broun-Lindsay, Major H.
Fairfax, Captain J. G.
Kindersley, Major Guy M.


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Falle, Sir Bertram G.
King, Captain Henry Douglas


Buckingham, Sir H.
Fermoy, Lord
Kinloch-Cooke, Sir Clement


Bull, Rt. Hon. Sir William James
Finburgh, S.
Lamb, J. Q.


Burgoyne, Lieut.-Colonel Sir Alan
Fleming, D. P.
Lane-Fox, Lieut.-Col. George R.


Burman, J. B.
Ford, P. J.
Leigh, Sir John (Clapham)


Burney, Lieut.-Com. Charles D.
Forestier-Walker, L.
Lister, Cunliffe-, Rt. Hon. Sir Philip


Burton, Colonel H. W.
Foster, Sir Harry S.
Locker-Lampson, Com. O. (Handsw'th)


Butler, Sir Geoffrey
Foxcroft, Captain C. T.
Loder, J. de V.


Cadogan, Major Hon. Edward
Ganzoni, Sir John
Looker, Herbert William


Caine, Gordon Hall
Gates, Percy
Luce, Maj.-Gen. Sir Richard Harman


Campbell, E. T.
Gibbs, Col. Rt. Hon. George Abraham
Lumley, L. R.


Cassels, J. D.
Gilmour, Lt.-Col. Rt. Hon. Sir John
MacAndrew, Charles Glen


Cautley, Sir Henry S.
Goff, Sir Park
McDonnell, Colonel Hon. Angus


Cayzer, Sir C. (Chester, City)
Grant, J. A.
Mackinder, W.


Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)
Greene, W. P. Crawford
MacMillan, Captain H.


Cazalet, Captain Victor A.
Grenfell, D. R. (Glamorgan)
Makins, Brigadier-General E.


Cecil, Rt. Hon. Sir Evelyn (Aston)
Gretton, Colonel John
Malone, Major P. B.


Cecil, Rt. Hon. Lord H. (Ox. Univ.)
Grotrian, H. Brent
Manningham-Buller, Sir Mervyn


Chadwick, Sir Robert Burton
Guest, Capt. Rt. Hon. F. E. (Bristrol, N.)
Margesson, Captain D.


Chamberlain, Rt. Hn. J. A. (Birm., W).
Guinness, Rt. Hon. Walter E.
Marriott, Sir J. A. R.


Chamberlain, Rt. Hon. N. (Ladywood)
Gunston, Captain D. W.
Merriman, F. B.


Charteris, Brigadier-General J.
Hacking, Captain Douglas H.
Meyer, Sir Frank


Christie, J. A.
Hall, Lieut.-Col. Sir F. (Dulwich)
Milne, J. S. Wardlaw-


Churchill, Rt. Hon. Winston Spencer
Hall, Capt. W. D'A. (Brecon & Rad.)
Mitchell, Sir W. Lane (Streatham)


Churchman, Sir Arthur C.
Hannon, Patrick Joseph Henry
Monsell, Eyres, Com. Rt. Hon. B. M.


Clarry, Reginald George
Harland, A.
Moore, Lieut.-Colonel T. C. R. (Ayr)


Cobb, Sir Cyril
Harrison, G. J. C.
Moore, Sir Newton J.




Morden, Colonel Walter Grant
Rye, F. G.
Sykes, Major-Gen. Sir Frederick H.


Morrison, H. (Wilts, Salisbury)
Salmon, Major I.
Tasker, Major R. Inigo


Murchison, C. K.
Samuel, A. M. (Surrey, Farnham)
Templeton, W. P.


Nall, Lieut.-Colonel Sir Joseph
Samuel, Samuel (W'dsworth, Putney)
Thompson, Luke (Sunderland)


Nelson, Sir Frank
Sandeman, A. Stewart
Thomson, F. C. (Aberdeen, South)


Newman, Sir R. H. S. D. L. (Exeter)
Sanders, Sir Robert A.
Thomson, Sir W. Mitchell- (Croydon, S.)


Nicholson, O. (Westminster)
Sanderson, Sir Frank
Tryon, Rt. Hon. George Clement


Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.)
Sassoon, Sir Philip Albert Gustave D.
Vaughan-Morgan, Col. K. P.


Nuttall, Ellis
Savery, S. S.
Waddington, R.


Oakley, T.
Scott, Sir Leslie (Liverp'l, Exchange)
Wallace, Captain D. E.


O'Connor, T. J. (Bedford, Luton)
Shaw, Lt.-Col. A. D. Mcl.(Renfrew, W)
Ward, Lt.-Col. A. L. (Kingston-on-Hull)


O'Neill, Major Rt. Hon. Hugh
Shaw, Capt. W. W. (Wilts, Westb'y)
Warner, Brigadier-General W. W.


Oman, Sir Charles William C.
Sheffield, Sir Berkeley
Warrender, Sir Victor


Pennefather, Sir John
Shepperson, E. W.
Waterhouse, Captain Charles


Penny, Frederick George
Simms, Dr. John M. (Co. Down)
Wells, S. R.


Perring, William George
Skelton, A. N.
Wheler, Major Sir Granville C. H.


Peto, Basil E. (Devon, Barnstaple)
Slaney, Major P. Kenyon
White, Lieut.-Colonel G. Dairymple


Pilditch, Sir Philip
Smith, R. W. (Aberd'n & Kinc'dine, C.)
Williams, Herbert G. (Reading)


Preston, William
Smith-Carington, Neville W.
Williams, Com. C. (Devon, Torquay)


Price, Major C. W. M.
Smithers, Waldron
Winby, Colonel L. P.


Rawlinson, Rt. Hon. John Fredk. Peel
Somerville, A. A. (Windsor)
Windsor-Clive, Lieut.-Colonel George


Reid, Capt. A. S. C. (Warrington)
Spender Clay, Colonel H.
Wise, Sir Fredric


Reid, D. D. (County Down)
Stanley, Col. Hon. G.F. (Will'sden, E.)
Wolmer, Viscount


Remnant, Sir James
Stanley, Lord (Fylde)
Womersley, W. J.


Rentoul, G. S.
Stanley, Hon. O. F. G. (Westm'eland)
Wood, Sir Kingsley (Woolwich, W.).


Rhys, Hon. C. A. U.
Steel, Major Samuel Strang
Woodcock, Colonel H. C.


Rice, Sir Frederick
Storry Deans, R.
Worthington-Evans, Rt. Hon. Sir L.


Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Stott, Lieut.-Colonel W. H.



Roberts, Samuel (Hereford, Hereford)
Strickland, Sir Gerald
TELLERS FOR THE NOES.—


Ruggles-Brise, Major E. A.
Sueter, Rear-Admiral Murray Fraser
Major Sir Harry Barnston and Major Hennessy.


Russell, Alexander West (Tynemouth)
Sugden, Sir Wilfrid

NEW CLAUSE.—(Amendment of 10 and 11 Geo. V, c. 32, s. 32.)

Section thirty-two of the Finance Act, 1921 (which provides for exemption of superannuation funds from Income Tax), shall have effect as though at the end of paragraph (b) in Sub-section (3) of that Section there were added the words "or, in case of death, for their widows, children, and/or other persons entitled to benefit."—[Sir Clement Kinloch-Cooke.]

Brought up, and read the First time.

Sir C. KINLOCH-COOKE: I beg to move, "That the Clause be read a Second time."
I think the Chancellor of the Exchequer will not deny that the organisation of a widows' and orphans' fund is, in principle, precisely similar to that of a superannuation fund. Not only will the Chancellor of the Exchequer agree with that, but I think the entire House will be in agreement on the point. Let us see what the Royal Commission on Income Tax had to say with regard to superannuation funds? They put forward certain recommendations, and founded them on these premises. They said:
We consider that when an employer makes an irrecoverable contribution to a recognised fund for the benefit of his workpeople, his contribution shall be regarded as a business expense, and allowed as a reduction, in computing his profits. Secondly, we consider also that the contributions the employé makes to secure a future pension should be allowed as a deduction from the income upon which his Income Tax would
otherwise be charged. Thirdly, the income arising from the investment of the funds should also, we think, be exempted from the tax.
These recommendations were adopted by the Government, and were incorporated in the Finance Act, 1921, and I and those who are associated with me desire to see the same treatment extended to widows' and orphans' funds. It is not a very large concession that we ask, and to a certain extent it is already recognised by the Board of Inland Revenue. For instance, the employers' contributions to widows' funds are admitted to rank as an expense in the assessment for Income Tax. The effect of the present claim would be, first, to legalise that position, and, secondly, to obtain relief from tax on the interest on the investment of the funds. In their Memorandum to the Royal Commission, the Board of Inland Revenue admitted that a superannuation fund was merely a channel, and they gave their reasons. I will read them to the House. They said:
A superannuation fund exists for the sole purpose of paying pensions, and not for making profits or accumulating unnecessary funds. Secondly, pensioners are, for the most part, exempt from tax. Thirdly, where they are not exempt, the pensioners are taxable on their pensions when they receive them.
These considerations apply with equal force to pension funds for widows and orphans. Moreover, as all the moneys received by the funds are wholly paid to
the annuitants, who bear tax, the taxation of interest on the investments and on the deposits of the funds becomes, as the House will see, a double tax. The liability of the State under the Old Age Pensions Act is very substantially decreased by reason of the benefits provided by these funds, and the expenditure under the Poor Law is also reduced, and I think it will be allowed that if this concession be made it will materially assist the Bill now before the House with regard to pensions for widows.
It would be thought there could be no objection whatever to granting this concession, but in conversations I have had with the Treasury on this matter they have put forward objections. Whether those objections will be repeated by the Chancellor to-night I do not know, but I would like to mention them. The Treasury say this concession may lay the Inland Revenue Department open to similar requests from bodies which they think are, or which may be thought to be, in a like situation. If that were a sound objection, there would be a great deal to be said for not granting the concession: but is it sound? I submit most humbly that it is not a sound objection, because the Clause I am moving is so worded as practically to limit the exemption from Income Tax to those funds which provide annuities for the widows and orphans of deceased employés. The safeguards provided by the Finance Act of 1921 remain intact. There are four safeguards. First, the funds must be properly established under trust; secondly, the sole purpose of the fund must be the provision of annuities; thirdly, the employer is to be a contributor to the fund; and, fourthly, the fund is to be recognised both by the employer and by the employed. So long as these widows' and orphans' funds are surrounded by these safeguards there cannot, I submit, be any danger whatsoever of any extension.
The second objection is with regard to the cost of the concession. I have no doubt the Chancellor of the Exchequer will be able to tell us the cost in respect of superannuation funds, but he cannot, of course, say exactly the cost of the concession with regard to widows' and orphans' funds. I think he will allow, however, that these funds are substantially less than one-tenth the number of
superannuation funds. Equally, their constituent membership is much smaller. They are of more recent establishment, and, consequently, the invested moneys are smaller in amount, while the benefit given by way of annuity is, in the main, less than that given by superannuation funds. All these considerations indicate very clearly to my mind that the cost of the concession must be a trifling matter. I have had some inquiries made, and have myself gone very carefully into this question, and my information shows that in the case of 31 widows' and orphans' funds the net cost to the Inland Revenue would be £22,000 per annum. Some allowance must, of course, be made for the few other societies' funds which I have not examined, but even when allowance is made for these the expense to the revenue would not be very much larger than the sum I have quoted. But let us put it at £25,000, and I think that may be considered to be the highest amount which the Inland Revenue would lose. I think the Chancellor of the Exchequer will agree that that amount is trifling, at any rate in comparison with the benefits de-rived from funds which are doing such very good work, and not only that but doing it on the very lines which it is the policy of the Government to encourage. It is for these reasons, and these reasons alone, that I ask the Government to accept the Motion which I have moved, and allow this new Clause to be adopted.
In conclusion, I wish to say that if it is not possible—I hardly like to commit myself to such an indiscretion, although the Chancellor of the Exchequer may have some other reason for not giving me this concession—if by any chance the right hon. Gentleman has some reasons which he wishes to give to the House, and in regard to which it will not be within my power to argue on the present occasion, I appeal to him, and I ask him to examine very carefully the arguments I have adduced against the objections which I have heard advanced on other occasions to my proposal. I ask the Chancellor of the Exchequer to deal with the question of the cost, and I ask him to confer with the experts and the people who are responsible for these funds. I ask him to discuss with them these questions and see exactly what the cost will be. If he finds out that the cost is not more than I have stated, then I hope
that at any rate he will say, "Although I cannot give this concession now, you may rely upon me giving it every consideration," and I hope that on the next occasion the right hon. Gentleman will be able to grant this concession.

Mr. LOOKER: I should like to say a few words to commend this new Clause to the House, and to the sympathetic consideration of the Chancellor of the Exchequer. This new Clause provides for the extension of the exemption of superannuation funds from Income Tax in the case of death for the widows, children and other persons entitled to benefit. I agree that once you begin to recognise the right of superannuation funds generally to exemption from Income Tax and take up a definite line, you will find it very difficult to know exactly at what precise point to stop. I submit to the Chancellor of the Exchequer that the Government have one foot over that line already, in fact they are astride it, and therefore it is only natural and right in the interests of the widows and children that they should bring the other foot over.

Mr. CHURCHILL: I need scarcely say that I find it an ungrateful task to resist the arguments which have been so engagingly put forward in the concise and forcible speeches of the hon. Members who moved and seconded this Motion. There are two aspects of this question. First of all, the merits of the actual proposal, and secondly, the consequences of adopting it. On the merits of the actual proposal I feel that the Mover and the Seconder have made out a case which has much to recommend it. When I come to the question of adopting it, I find myself upon a slippery slope, and every step taken in this direction only justifies the request for another step, and every advance made makes it more difficult to resist further pressure. When the Royal Commission on Income Tax was sitting, the Treasury with some misgivings withdrew their opposition in the case of superannuation funds, and no sooner had they agreed that the superannuation fund should be relieved than the result occurred which we are now witnessing, and proposals were made to exempt the widows and orphans funds. The Royal Commission, however, was very clear that superannuation funds stood on a dif-
ferent basis from thrift and provident funds and a fortiori from widows and orphans funds. They recommended
In the case of these funds also we are of opinion that the employer's contribution, which is in its essence a business expense, should be allowed as a deduction in arriving at his Income Tax assessment, but we are unable to recommend that the contributions of an employé to a provident and thrift fund, which contributions are in all cases returned to the contributor with interest, should be exempted. Nor do we consider that it would be possible to exempt from assessment the interest earned by the investment of the employer's and employés' contributions.
I am sure if we were now to extend the exemption to cover the case of orphans funds we should undoubtedly be compelled to go forward and treat provident and thrift funds in the same way. From the provident and thrift funds it would be a very easy step to go as far as the exemption of the investment income of life insurance companies, and, indeed, the exemption of the income from the savings of individuals generally, within certain moderate limits. I am not saying at all that these are not matters which should, in their proper time and place, be considered, though it is to be observed that they all tend greatly to complicate the general working of our already very voluminous Income Tax law and practice. But I am quite clear that it is not possible to decide on one of these steps, as has already been shown by what has followed in the path of the superannuation fund, without having in mind at the same time the other consequential steps. Moreover, I am told that in the case of many of these widows and orphans funds, particularly those where the contribution of the employer is on an actuarial basis, it would not be possible to ensure that the relief which it is now proposed should be granted would reach the actual beneficiaries of the fund, but that in quite a number of cases it could be absorbed entirely by the employer. That is a very serious consideration to bear in mind.
This subject has been discussed on several occasions. It was discussed last year, and, under the stern guidance of the party opposite, who then occupied these benches, it was negatived. I am bound to say—

Sir C. KINLOCH-COOKE: They regretted it.

Mr. CHURCHILL: I regret it, too. I do not think anyone can accuse us, nor did I in any way accuse them, of not being sympathetic towards the case of the widows and orphans. Indeed, the greatest feature of the whole of our legislation this year is the far-reaching provision which we are making in regard to widows and orphans, which will secure to possibly as many as 6,000,000 wives, after the 4th January, the certainty, in the event of their husbands dying, that they will have behind them at least £25 a year; and it is certainly proper to take that into consideration at a moment when we are forced to resist a concession that has been put forward with so much force. That is an advantage which will be given to a great number of those whom my hon. Friend has in his mind, which far exceeds anything that could arise from an alteration in the treatment of these funds from the point of view of Income Tax.
Therefore, I am afraid I am not in a position to agree to incorporate this proposal in the Budget. The expense would be appreciable, but if the expense stood alone it would not necessarily be decisive. It is the need of a thoroughly systematic examination of all the reactions that is my principal argument in resisting the proposal. But, if we are not able to concede it, I can promise that I will fall in with my hon. Friend's suggestion, and will make an examination of the matter in the interval between now and the bringing forward of future Budget proposals; and I will make an examination of it, not only in conjunction with Members of the House who are interested in the matter and have taken it up, but will also consult with the experts of these particular societies and see whether it is possible in the future to draw some line which would meet this point without committing us to an almost indefinite extension of the principle. If that would meet the views of my hon. Friend, I can certainly give him that undertaking. Although similar undertakings on this and other subjects have been given in every one of the last three years by my predecessors in this office, those undertakings could not be carried out because, almost immediately after the passing of the Budget, the Chancellor of the Exchequer and the Government were pole-axed, and were not able to give con-
sideration to the various matters with which they had dealt. That happened three times in succession, but I have already expressed the hope to the House that such occurrences, so detrimental to the efficiency of our institutions, would finally cease.

Mr. W. GRAHAM: I shall not detain the House for more than a few moments, but I am bound to put one or two points, in view of the speech which the Chancellor of the Exchequer has just made It is quite true that in the last year or two many of us have hesitated to support a Clause of this kind, because it did appear to make an inroad upon what we believed to be the programme, in regard to superannuation, of the Royal Commission on Income Tax of 1919. I confess, however, that, on looking into the matter more closely in recent times, it appears to me to be a very simple proposal to try to cover a small part of the schemes in relation to superannuation which was left uncovered by the provisions of the Act of 1921, which gave exemption to contributions to funds of that description. All that we are pleading for here is that one section or part, and a small part at that, of those superannuation funds, which already enjoy exemption in large measure, should be relieved of this burden where it falls upon that rather tragic part of the fund which deals with widows and orphans. I quite recognise the argument of the Chancellor of the Exchequer about repercussions. It is the argument which everyone representing the Treasury employs when trying to stave off difficult and awkward Amendments. But there is one point about the reply of the Chancellor of the Exchequer, namely, that he has not condescended upon any figure at all in regard to the cost. It has been put as high as £250,000—

Mr. CHURCHILL: I should have stated that our estimate of the cost, in the case of widows and orphans funds alone, apart from the potential reactions, is £200,000.

Mr. GRAHAM: £200,000 is now offered as the potential cost, but, after all, the very careful recent inquiry showed that only about 31 of these funds were distinguished. Allowing that the inquiry was probably not quite complete, there would not be more than a few in addition to that number, and we have the very best reason, from people who have
worked these schemes all their lives, for believing that the cost would not exceed about £25,000 per annum. It is very-difficult to reconcile that figure with the £200,000 which the Chancellor of the Exchequer has suggested, and I think that on the whole a case has been made out for this Amendment. Accordingly, I hope that the promoters of the Amendment will take it to a Division. I do not think we can ride off on an undertaking to make further investigation, because this matter has been investigated already, and everyone knows all about it. There-is no more information to be obtained, and this proposal merely seeks to put a small part of the scheme in the position

that is now occupied by the larger part, to which this concession has already been granted.

Question put, "That the Clause be read a Second time."

The House proceeded to a Division.

Sir C. KINLOCH-COOKE: (seated and covered): On a point of Order. After the speech of the Chancellor of the Exchequer, I do not myself think it is necessary to go to a Division.

Mr. DEPUTY - SPEAKER (Captain FitzRoy): That is not a point of Order.

The House divided: Ayes, 120; Noes, 242.

Division No. 197.]
AYES.
[8.33 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Hardie, George D.
Saklatvala, Shapurji


Adamson, W. M. (Staff., Cannock)
Harris, Percy A.
Scrymgeour, E.


Alexander, A. V. (Sheffield, Hillsbro')
Mayday, Arthur
Shaw, Rt. Hon. Thomas (Preston)


Ammon, Charles George
Henderson, Rt. Hon. A. (Burnley)
Short, Alfred (Wednesbury)


Attlee, Clement Richard
Henderson, T. (Glasgow)
Slesser, Sir Henry H.


Baker, J. (Wolverhampton, Bilston)
Hirst, G. H.
Smillie, Robert


Barker, G. (Monmouth, Abertillery)
Hirst, W. (Bradford, South)
Smith, Ben (Bermondsey, Rotherhithe)


Barnes, A.
Hore-Belisha, Leslie
Smith, H. B. Lees- (Keighley)


Barr, J.
Hudson, J. H. (Huddersfield)
Smith, Rennie (Penistone)


Batey, Joseph
Hutchison, Sir Robert (Montrose)
Snell, Harry


Beckett, John (Gateshead)
Jenkins, W. (Glamorgan, Neath)
Snowden, Rt. Hon. Philip


Benn, Captain Wedgwood (Leith)
John, William (Rhondda, West)
Spencer, George A. (Broxtowe)


Bowerman, Rt. Hon. Charles W.
Johnston, Thomas (Dundee)
Stamford, T. W.


Broad, F. A.
Jones, Henry Haydn (Merioneth)
Stephen, Campbell


Charleton, H. C.
Jones, Morgan (Caerphilly)
Sutton, J. E.


Clynes, Rt. Hon. John R.
Jones, T. I. Mardy (Pontypridd)
Taylor, R. A.


Collins, Sir Godfrey (Greenock)
Kelly, W. T.
Thomas, Rt. Hon. James H. (Derby)


Connolly, M.
Kennedy, T.
Thomson, Trevelyan (Middlesbro. W.)


Cove, W. G.
Kenyon, Barnet
Thorne, G. R. (Wolverhampton, E.)


Dalton, Hugh
Lansbury, George
Thorne, W. (West Ham, Plaistow)


Day, Colonel Harry
Lawson, John James
Thurtle, E.


Dennison, R.
Lowth, T.
Tinker, John Joseph


Duncan, C.
Lunn, William
Varley, Frank B.


Edwards, John H. (Accrington)
Mackinder, W.
Viant, S. P.


Evans, Capt. Ernest (Welsh Univer.)
MacLaren, Andrew
Walsh, Rt. Hon. Stephen


Forrest, W.
Maclean, Neil (Glasgow, Govan)
Warne, G. H.


Garro-Jones, Captain G. M.
March, S.
Watson, W. M. (Dunfermline)


Gillett, George M.
Mitchell, E. Rosslyn (Paisley)
Watts-Morgan, Lt.-Col. D. (Rhondda)


Gosling, Harry
Montague, Frederick
Webb, Rt. Hon. Sidney


Graham, D. M. (Lanark, Hamilton)
Morris, R. H.
Wedgwood, Rt. Hon. Josiah


Graham, Rt. Hon. Wm. (Edin., Cent.)
Morrison, R. C. (Tottenham, N.)
Westwood, J.


Greenall, T.
Naylor, T. E.
Whiteley, W.


Grenfell, D. R. (Glamorgan)
Oliver, George Harold
Williams, David (Swansea, E.)


Griffiths, T. (Monmouth, Pontypool)
Palin, John Henry
Williams, T. (York, Don Valley)


Groves, T.
Paling, W.
Wilson, R. J. (Jarrow)


Grundy, T. W.
Pethick-Lawrence, F. W.
Windsor, Walter


Guest, J. (York, Hemsworth)
Potts, John S.
Wright, W.


Guest, Dr. L. Haden (Southwark, N.)
Richardson, R. (Houghton-le-Spring)
Young, Robert (Lancaster, Newton)


Hall, F. (York, W.R., Normanton)
Riley, Ben



Hall, G. H. (Merthyr Tydvil)
Roberts, Rt. Hon. F. O. (W. Bromwich)
TELLERS FOR THE AYES.—


Hannon, Patrick Joseph Henry
Rose, Frank H.
Mr. Allen Parkinson and Mr. Hayes.


NOES.


Acland-Troyte, Lieut.-Colonel
Barclay-Harvey, C. M.
Bird, E. R. (Yorks, W. R., Skipton)


Agg-Gardner, Rt. Hon. Sir James T.
Barnett, Major Richard
Blades, Sir George Rowland


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Barnston, Major Sir Harry
Blundell, F. N.


Ashmead-Bartlett, E.
Beamish, Captain T. P. H.
Boothby, R. J. G.


Astor, Viscountess
Bellairs, Commander Carlyon W.
Bourne, Captain Robert Croft


Atholl, Duchess of
Bennett, A. J.
Bowater, Sir T. Vansittart


Baldwin, Rt. Hon. Stanley
Bentinck, Lord Henry Cavendish-
Bowyer, Capt. G. E. W.


Balfour, George (Hampstead)
Berry, Sir George
Boyd-Carpenter, Major A.


Balniel, Lord
Bethell, A.
Bridgeman, Rt. Hon. William Clive


Banks, Reginald Mitchell
Betterton, Henry B.
Briscoe, Richard George


Brittain, Sir Harry
Gunston, Captain D. W.
O'Neill, Major Rt. Hon. Hugh


Brocklebank, C. E. R.
Hacking, Captain Douglas H.
Oman, Sir Charles William C.


Brooke, Brigadier-General C. R. I.
Hall, Lieut.-Colonel Sir F. (Dulwich)
Pennefather, Sir John


Broun-Lindsay, Major H.
Hall, Capt. W. D'A. (Brecon & Rad.)
Penny, Frederick George


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Harland, A.
Perring, William George


Buckingham, Sir H.
Harrison, G. J. C.
Peto, Basil E. (Devon, Barnstaple)


Bull, Rt. Hon. Sir William James
Harvey, G. (Lambeth, Kennington)
Pilditch, Sir Philip


Burman, J. B.
Harvey, Major S. E. (Devon, Totnes)
Preston, William


Burney, Lieut.-Com. Charles D.
Haslam, Henry C.
Price, Major C. W. M.


Butler, Sir Geoffrey
Hawke, John Anthony
Rawlinson, Rt. Hon. John Fredk. Peel


Cadogan, Major Hon. Edward
Henderson, Capt. R. R. (Oxf'd, Henley)
Reid, Capt. A. S. c. (Warrington)


Caine, Gordon Hall
Henderson, Lieut.-Col. V. L. (Bootle)
Reid, D. D. (County Down)


Campbell, E. T.
Heneage, Lieut.-Col. Arthur P.
Rhys, Hon. C. A. U.


Cassels, J. D.
Henn, Sir Sydney H.
Rice, Sir Frederick


Cautley, Sir Henry S.
Hennessy, Major J. R. G.
Richardson, Sir P. W. (Sur'y, Ch'ts'y)


Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)
Henniker-Hughan, Vice-Adm. Sir A.
Ruggles-Brise, Major E. A.


Cecil, Rt. Hon. Lord H. (Ox. Univ.)
Herbert, Dennis (Hertford, Watford)
Russell, Alexander West (Tynemouth)


Chadwick, Sir Robert Burton
Hogg, Rt. Hon. Sir D. (St. Marylebone)
Rye, F. G.


Chamberlain, Rt. Hn. J. A. (Birm. W.)
Holbrook, Sir Arthur Richard
Salmon, Major I.


Charteris, Brigadier-General J.
Homan, C. W. J.
Samuel, A. M. (Surrey, Farnham)


Christie, J. A.
Hopkins, J. W. W.
Samuel, Samuel (W'dsworth, Putney)


Churchill, Rt. Hon. Winston Spencer
Hopkinson, A. (Lancaster, Mossley)
Sanderson, Sir Frank


Churchman, Sir Arthur C.
Horlick, Lieut.-Colonel J. N.
Sassoon, Sir Philip Albert Gustave D.


Clarry, Reginald George
Howard, Capt. Hon. D. (Cumb., N.)
Savery, S. S.


Cobb, Sir Cyril
Hudson, Capt. A. U. M. (Hackney, N.)
Shaw, Lt.-Col. A. D. Mcl. (Renfrew, W)


Cockerill, Brigadier-General G. K.
Hudson, R. S. (Cumberland, Whiteh'n)
Shaw, Capt. W. W. (Wilts, Westb'y)


Cohen, Major J. Brunel
Hume, Sir G. H.
Shepperson, E. W.


Colfox, Major Wm. Phillips
Hurst, Gerald B.
Simms, Dr. John M. (Co. Down)


Cooper, A. Duff
Hutchison, G. A. Clark (Midl'n & P'bl's)
Skelton, A. N.


Cope, Major William
Inskip, Sir Thomas Walker H.
Slaney, Major P. Kenyon


Courtauld, Major J. S.
Jackson, Lieut.-Colonel Hon. F. S.
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Cowan, Sir Wm. Henry (Islington, N.)
Jackson, Sir H. (Wandsworth, Cen'l)
Smith-Carington, Neville W.


Craig, Ernest (Chester, Crewe)
Jacob, A. E.
Smithers, Waldron


Craik, Rt. Hon. Sir Henry
Jephcott, A. R
Somerville, A. A. (Windsor)


Croft, Brigadier-General Sir H.
Jones, G. W. H. (Stoke Newington)
Spender Clay, Colonel H.


Crook, C. W.
Joynson-Hicks, Rt. Hon. Sir William
Stanley, Col. Hon. G.F. (Will'sden, E.)


Crooke, J. Smedley (Deritend)
Kennedy, A. R. (Preston)
Steel, Major Samuel Strang


Crookshank, Col. C. de W. (Berwick)
Kidd, J. (Linilthgow)
Storry Deans, R.


Crookshank, Col. H. (Lindsey, Gainsbro)
Kindersley, Major Guy M.
Stott, Lieut.-Colonel W. H.


Curtis-Bennett, Sir Henry
King, Captain Henry Douglas
Strickland, Sir Gerald


Curzon, Captain Viscount
Knox, Sir Alfred
Sueter, Rear-Admiral Murray Fraser


Dalkeith, Earl of
Lamb, J. Q.
Sugden, Sir Wilfrid


Dalziel, Sir Davison
Lane-Fox, Lieut.-Col. George R.
Tasker, Major R. Inigo


Davidson, J. (Hertf'd, Hemel Hempst'd)
Leigh, Sir John (Clapham)
Templeton, W. P.


Davidson, Major-General Sir John H.
Lister, Cunliffe-, Rt. Hon. Sir Philip
Thompson, Luke (Sunderland)


Davies, Maj. Geo. F. (Somerset, Yeovil)
Locker-Lampson, Com. O. (Handsw'th)
Thomson, Sir W. Mitchell- (Croydon, S.)


Dawson, Sir Philip
Loder, J. de V.
Tryon, Rt. Hon. George Clement


Dean, Arthur Wellesley
Lucas-Tooth, Sir Hugh Vere
Vaughan-Morgan. Col. K. P.


Dixon, Captain Rt. Hon. Herbert
MacAndrew, Charles Glen
Waddington, R.


Doyle, Sir N. Grattan
McDonnell, Colonel Hon. Angus
Wallace, Captain D. E.


Drewe, C.
Macintyre, I.
Ward, Lt.-Col. A. L.(Kingston-on-Hull)


Eden, Captain Anthony
MacMillan, Captain H.
Warner, Brigadier-General W. W.


Edmondson, Major A. J.
Makins, Brigadier-General E.
Warrender, Sir Victor


Elliot, Captain Walter E.
Malone, Major P. B.
Waterhouse, Captain Charles


Erskine, Lord (Somerset, Weston-s.-M.)
Margesson, Captain D.
Wells, S. R.


Erskine, James Malcolm Monteith
Merriman, F. B.
Wheler, Major Sir Granville C. H.


Everard, W. Lindsay
Meyer, Sir Frank
White, Lieut.-Colonel G. Dairymple


Fairfax, Captain J. G.
Milne, J. S. Wardlaw-
Williams, Com. C. (Devon, Torquay)


Falle, Sir Bertram G.
Mitchell, Sir W. Lane (Streatham)
Williams, Herbert G. (Reading)


Fielden, E. B.
Monsell, Eyres, Com. Rt. Hon. B. M.
Winby, Colonel L. P.


Finburgh, S.
Moore, Lieut.-Colonel T. C. R. (Ayr)
Windsor-Clive, Lieut.-Colonel George


Fleming, D. P.
Moore, Sir Newton J.
Wise, Sir Fredric


Ford, P. J.
Morden, Colonel Walter Grant
Wolmer, Viscount


Forestier-Walker, L.
Morrison, H. (Wilts, Salisbury)
Womersley, W. J.


Foster, Sir Harry S.
Murchison, C. K.
Wood, Sir Kingsley (Woolwich, W.)


Ganzonl, Sir John
Nail, Lieut.-Colonel Sir Joseph
Woodcock, Colonel H. C.


Gates, Percy
Nelson, Sir Frank
Worthington-Evans, Rt. Hon. Sir L.


Gibbs, Col. Rt. Hon. George Abraham
Newman, Sir R. H. S. D. L. (Exeter)
Young, E. Hilton (Norwich)


Goff, Sir Park
Nicholson, O. (Westminster)



Greene, W. P. Crawford
Nuttall, Ellis
TELLERS FOR THE NOES.—


Grotrian, H. Brent
Oakley, T.
Mr. F. C. Thomson and Lord


Guinness, Rt. Hon. Walter E.
O'Connor, T. J. (Bedford, Luton)
Stanley.

Mr. MAXTON: I wish to raise a point of Order. When I arrived at the entrance to the Division Lobby, the passage was completely blocked, so that it was impossible either to enter the "Aye" Lobby or the "No" Lobby, with the result that I and others were unable to cast a vote in the Division that
has just taken place. I ask your ruling as to whether the Division is a valid vote, since Members were unable to take part in it?

Mr. DEPUTY-SPEAKER: I am very sorry the hon. Member was deprived of the opportunity of recording his vote.
Every effort is made to keep the various entrances to the lobby open, and there are several others besides the one to which the hon. Member has referred.

Mr. STEPHEN: After the notice was given that the doors were locked, the crowd at the door melted away in a second or two, but while the doors were still open that bunch of Members were there definitely at the door as if they were really blocking the passage intentionally. [HON. MEMBERS: "Oh!"] It is all very well—

Mr. DEPUTY-SPEAKER: I do not think this ought to develop into a debate. I understand that, unfortunately, several hon. Members found the crowd rather excessive at the entrance to the House. I do not think that often occurs. Perhaps another time the hon. Member will have better luck.

Mr. STEPHEN: I did not wish to make it a matter of debate, but I am stating what appeared to be the facts in connection with the case. I want to know what your ruling is. There are other approaches to the Lobby, and when one has come to one of those definite approaches and allowed plenty of time to get into the Lobby, surely there is some remedy.

Mr. DEPUTY-SPEAKER: The hon. Member must realise that there are six minutes from the time the Question is put the first time until the doors are ordered to be locked, and hon. Members must do their best to enter the Lobby during that interval.

Mr. ERSKINE: Is it not a fact that, if there was any obstruction, it was obstruction by the hon. Member's own friends.

Mr. MAXTON: I would not have raised this matter had it been just the ordinary difficulty in entering the Lobby that regularly occurs, but this was absolutely abnormal. So far from there being any other entrance, it was impossible to get there unless one came round and entered from behind the Speaker's Chair.

Mr. ATTLEE: I was in the same difficulty. I was just in front of my two hon. Friends, the Member for Bridgeton (Mr. Maxton) and the Member for Camlachie (Mr. Stephen), and I only managed to get
through with the utmost difficulty. There was a great crush of Members who had voted in the other Lobby.

Mr. DEPUTY-SPEAKER: I do not think that there was any blame attaching to any hon. Member for what occurred. Time is allowed for hon. Members to get into the Lobby.

Mr. MAXTON: I do not want to be vexatious or to delay the Debate, but I want you to give consideration to the question as to whether the vote under these conditions is a valid vote of the House. I have it in my recollection that it is one of the Standing Orders that we pass at the beginning of every Session that a Member of this House shall not be delayed or obstructed in doing the necessary work of the House. We certainly were in that position to-night, and I ask you to consider whether it is a valid vote since hon. Members were definitely obstructed from casting their votes?

Mr. DEPUTY-SPEAKER: As far as I am concerned, all that I have to do is to carry out the Standing Orders of the House. The only rulings we can give from the Chair in regard to this question is that the approaches shall be kept clear.

Mr. SPENCER: Have the Whips any prerogative to include in the vote just taken the vote of any hon. Member if they are convinced that there has been unnecessary obstruction?

Mr. DEPUTY-SPEAKER: There is no power to do that.

NEW CLAUSE.—(Further relief from Entertainments Duty for certain philanthropic or charitable entertainments.)

The provisions in Sub-section (5) of Section one of the Finance (New Duties) Act, 1916, which, as amended by Sub-section (4) of Section six of the Finance Act, 1924, require the repayment to the proprietor of an entertainment in certain cases of the amount of the Entertainments Duty paid in respect of the entertainment, shall have effect as if the words "and that the whole of the expenses of the entertainment do not exceed fifty per cent. of the rceipts" were omitted.—[Mr. Griffiths.]

Brought up, and read the First time.

Mr. GRIFFITHS: I beg to move, "That the Clause be read a Second time."
When I took part in the Debate with a view to abolishing the Entertainments Duty, the Chancellor of the Exchequer pointed out that we were asking for a concession of something like £6,000,000. The concession for which I am asking now is very small. From the reports that I have received from my constituency and elsewhere, the Entertainments Duty is unjustifiable in so far as certain institutions are concerned. I will explain the effect of the tax on halls and institutions erected by miners, steelworkers and other people for educational purposes. In my district, in Blaenavon, there is an institution, connected with which is a library and a large hall for public meetings. The money for the erection of the institution was contributed by the workmen, week by week, and handed over to a committee of workmen who manage the library and hall and the various other departments in the institution. These workmen give their whole time to managing the affairs of the institution. It is a labour of love. Seeing that the hall is sometimes empty for four and five days a week in a small district of that kind, they decided to run what they call a cinema show. They derive profits as a result of the cinema show, and because they exceed the 50 per cent. stipulated in the Clause which is now the law of the land, by paying artistes, they are charged the Entertainments Duty. The management committee utilise all the money, which they do not call profit, for the purpose of giving recreation not only to the miners and steelworkers in the district who own the institution, but to the ratepayers in the town generally.
Out of the surplus money, two or three years ago, they bought a piece of land and made a cricket ground, football ground, bowling green, tennis court and a swimming bath. In doing this they relieve the rates of the town to the extent of about 8d. in the £. Therefore, the ratepayers are relieved on their rates by 8d. in the £ as the result of the money taken at this institution. If the money had been distributed in profits they would be liable to pay tax, but seeing that the money is spent in this way and that it is not profit such as other companies divide amongst themselves, they ought not to be called upon to pay tax. To add insult to injury, the Inland Revenue people compel them to pay In-
come Tax on their profits, so that they not only pay Entertainments Duty but Income Tax. That is no encouragement for these miners and steelworkers, who do this work free of charge and give their time for the benefit and the relief of the ratepayers. Yesterday I met a deputation of these men and they said "You had better go back and tell the Chancellor of the Exchequer that he is giving in a full year £40,000,000 to people who can afford to pay for entertainments, and he is giving in that £40,000,000, more to his friends on that side of the House than the miners earn in wages." The miners' wages in South Wales last year amounted to £30,000,000, and their contention is that if the Chancellor can find £40,000,000 for his friends the rich people on the other side, he can very well give this small concession to these people who are trying to carry on these institutions for educational purposes.

Mr. G. HALL: I beg to second the Motion.
The purpose of this Amendment is to exempt from Entertainments Duty those charitable performances conducted by musical and other organisations or associations throughout the country. For some years this question engaged the attention of the House and concessions have been made. First of all, the amount that was allowed for the expenses, before any abatement could be given for the Entertainments Duty on performances for charitable purposes, was fixed at something like 20 per cent. That was increased to 30 per cent. Last year, as a result of the concession that was given by the ex-Chancellor of the Exchequer, it was further increased to 50 per cent. What we ask is that in the case of bona fide charitable performances the limit of 50 per cent. should be abolished, and that if 60 or 75 per cent. of the total proceeds were used for that purpose it should not deter the authorities from exempting the performance from Entertainments Duty.
9.0 P.M.
Every year it is becoming much more difficult to raise money for charitable purposes. Hospitals and all those other institutions are suffering very much. We should do everything we can to encourage those men and women who give their services so freely for purposes of this kind. They feel that it is not right, when they
are organising performances of this character, that they should be charged Entertainments Duty if they do not limit the expenses to 50 per cent. It cannot be argued that this concession will cost very much. Last year the ex-Chancellor of the Exchequer, when pressed as to how much this concession would cost—at a time when the Entertainments Duty was very much higher than it is this year and the allowance was very much lower—said that it would cost something lees than £100,000. I assume that it is now estimated to cost something like from £50,000 to £60,000. That amount cannot make very much difference in a Budget of something like £800,000,000. I am sure that the Government wish to encourage those people who are so anxious to assist a charitable object to go on with their work. If the Chancellor comes to South Wales he will find that in almost every mining town and village we have our musical associations with thousands of members who devote hours and days of their time to working up our oratorios, cantatas and dramatic performances for the purposes of charity. It takes a considerable amount of money to provide the necessary dresses and one thing or another. They feel now, during these very serious and economic times, that unless they can have some encouragement, the work which they have been able to do for the past 10 or 15 years will have to be discontinued. Last year feeling was so very strong on this point that this was one of the very few matters on which the late Government were defeated. They were defeated by something like 50 or 60 votes, and almost all the Chancellor's friends, who are now sitting on the other side of the House, went into the Lobby to support the abolition of this tax upon these charitable performances. Seeing that concessions to very wealthy landowners have been made to the extent of £500,000 a year this year, the Chancellor may be asked to concede this very small amount to show his sympathy with those people, who are prepared to sacrifice their time, and also with their object which is the benefit of charity, which will benefit very largely as a result of this concession.

Mr. CHURCHILL: The hon. Member who moved this new Clause dealt in detail with the particular case which came
under his notice, and his account of it was engaging my most sympathetic attention when I was rather rebuffed by the controversial conclusion which he attached to his remarks, which up to then had been of a most persuasive character. There is no doubt that this subject was marked by very great concessions last year, and to some extent these concessions were extorted from the Government last year. I am not myself familiar with the exact Parliamentary episode which occurred, but it is by no means the case that the only concession obtained was an increase in the percentage allowed for expenses from 30 per cent. to 50 per cent. The Finance. Act of 1924, besides raising the proportion of expenses to 50 per cent., in respect of all charitable entertainments, abolished the expenses test altogether in respect of entertainments promoted by societies or institutions of a permanent character established or conducted solely or partly for philanthropic or charitable purposes. This provision authorises the Customs and Excise Department to examine the past records of societies that apply for exemption, so as to enable them to judge whether the entertainment in respect of which exemption is sought is a bona fide effort to raise money for charitable purposes. You have this state of the law accordingly: That every entertainment promoted by a charitable body, such as a hospital for its own funds, is now exempted, however high the proportion of expenses may be. Secondly, every entertainment promoted by other permanent bodies with a bona fide charitable record—I wonder whether that might not meet the case of the Mover of the Clause—is exempted, provided that a reasonable proportion of the takings goes to charity. Finally, any entertainment, by whomsoever promoted, not a permanent body, but a fortuitous gathering of individuals brought together ad hoc, for that purpose alone, is protected from Entertainments Duty, provided that the proceeds are devoted to charity and not more than 50 per cent. of the takings is absorbed in expenses. I do not think that anyone can say that an entertainment which cannot fit itself into any of these very elaborate and very considerate provisions requires special legislative attention by this House at the present time. After all, there are dangers
on the other side. It would be well worth while for the hon. Gentleman who moved this new Clause to examine these provisions very carefully, and to see whether they do not fit the case he has in mind. I would be willing to assist him in that examination.
But there are other classes which, the hon. Member would be the first to agree with me, we do not wish to exempt. We do not wish to encourage the development of a class of so-called charitable entertainments which really would be bogus entertainments, got up by people who would say, "We are giving all the proceeds to charity," and then probably only about 2 per cent. or 5 per cent. is given to charity, while very large payments go to the individuals who are the promoters, and, in fact, they escape the Entertainments Duty under false pretences. That would be very unfair to bonâ fide theatrical companies and entertainment companies, who would be paying the Duty in the ordinary course. We must safeguard the theatrical profession from that

kind of abuse. It is for that reason that the House has insisted on keeping this 50 per cent. limit. I should have thought that that limit was a very broad and reasonable limit, and that it would be very undesirable, quite apart from the effect on the revenue, to have a regular practice of people dividing up all the proceeds, or practically all the proceeds, of the entertainment money amongst themselves, and escaping the Duty by some very pro forma contribution to a charity. For these reasons I fear that we cannot carry this matter any further than it was left by our predecessors in the Finance Bill of last year; but I shall be very glad, in the case that has been mentioned by the Mover, or in other cases of that category, if they are brought to me privately, to ascertain exactly how they would fall, having regard to the different provisions of the law as I have stated them.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 121; Noes, 262.

NEW CLAUSE.—(Exemption of Easter offerings from Income Tax.)

Easter offerings voluntarily paid to ministers of religion shall be exempt from Income Tax.—[Mr. Rawlinson.]

Brought up, and read the First time.

Mr. RAWLINSON: I beg to move, "That the Clause be read a Second time."
I had the privilege last year of moving a new Clause in somewhat similar terms, and I had the satisfaction on that occasion of having, I think, 170 Members of the party to which I belong in the Lobby with me, and, in addition, I got the admission from the then Chancellor of the Exchequer that in the restricted form in which I am moving it to-night the new Clause would cause an expenditure to the Exchequer so negligible that it was unnecessary to give the exact figure. I assume that that meant a sum which was negligible to the Exchequer, but to the people for whom I am speaking it is by no means negligible, and it involves a very irritating and objectionable form of taxation. For these reasons I have some hope that the Government may give me assistance to-night in connection with my proposal. The facts are, shortly, these: Easter offerings are of very long standing. For many hundreds of years Easter offerings have been given by custom to certain ministers of religion. Nobody ever thought they were subject to Income Tax until the year 1907. For a good many years people were under the impression that they were not liable, and Income Tax was never asked for and never paid.
In 1907 when the question was first raised, the Commissioners of Income Tax, who are the guardians of the subject as against the Crown, decided that Easter offerings were not liable to Income Tax, and from that decision the Crown appealed to Mr. Justice Bray—whom I regard as one of the best Judges I remember during my time. He decided in the same way, and so there was a pretty strong consensus of opinion that the offerings were not liable. The Government appealed against that finding and
the Court of Appeal and the House of Lords found in favour of the Government, though the Judges, especially in the Court of Appeal, expressed the greatest regret at having to come to that conclusion. It was said that though it might not be the intention of the Legislature, the law was drawn in such a way that Easter offerings in the form in which they were then given were liable to tax. I think that one of the Lord Justices said he was particularly sorry, because the country clergy paid far more in rates and taxes on their income than probably any other class of the community. Be that as it may, this was the first alteration in this respect. Nobody until then had dreamt that these offerings were taxable, and for the first time they were made to pay taxes. I am now asking the House to reverse that decision and to come back to the old practice under which these offerings were not liable.
In addition to the broad justice of the case there is the point that this is a purely voluntary payment and as such should not be subject to taxation. I submit that there has to be a great refinement of the law in order to show that they are taxable. If a voluntary payment for services rendered were made at any other time of the year it would be exempt, but as I understand it, a voluntary payment for services rendered made at a customary time of year brings it within the scope of taxation. I say that is a close refinement of the law and it leads to many attempts to avoid coming within the scope of the tax. This evening I had the privilege of talking the matter over with many hon. Members who were showing ways in which they honestly thought this tax could be evaded. That is one of the difficulties which we have to deal with. If a person wishes to make this annual contribution without rendering the clergyman subject to this tax, instead of paying it in the ordinary way with the other offerings at Easter he can send a cheque at some other period of the year and say nothing about it. That payment would not be liable to tax at all, but would be in the same position as a
gift such as could be made to anybody else without being liable to taxation. Therefore it lends itself in that way to legitimate evasion, and further than that it also forms a colorable evasion. It will be said against me, "Why trouble the Government with laws of this kind when you can evade them in such a simple way by making the collection at a later time of the year?" There are many answers to that, among them, I think, that if a man does not make his contribution at the customary time when the churchwarden calls upon him to get his collection and says, "I will make it up at a later date," honestly meaning to make it up. One honestly forgets, or death comes, or marriage, or some other calamity. In addition to that there are some people mean enough to make an excuse of that kind and say, "I will pay later on," and do not pay. I do ask this concession at the hands of the Government. Its cost is negligible. It is obviously an unjust tax. Whatever the technical effect may be, everybody knows that it is simply a voluntary gift given by way of a present to the clergyman of the parish. Merely because it is given him in consideration of services which he has rendered it becomes taxable, whereas if it can be shown to be given as a mere gift to him or his children it is not taxable. I do ask the Government to allow this very small concession to the clergy who deserve well at the hands of the community at large.

Sir H. SLESSER: I beg to second the Motion.
In supporting this new Clause I should like to make it clear at the outset that although I am speaking from this bench I am supporting it entirely on my own responsibility. You have here a technical decision that the gift is a profit accruing out of the office of a clergyman. That is the technical legal decision and, as my right hon. Friend the Member for Cambridge University (Mr. Rawlinson) said, we do not quarrel with that legal decision, indeed, we cannot, because the House of Lords has decided that it is the law, but we do ask the House here to remedy technicalities to consider the reality of the case. So far from it accruing out of office, it is given by the people who present it to the particular minister as a gift. It is a voluntary offering. That is the very nature of it, and whether it be
technically a profit or not the whole value and virtue of this offering is its voluntary nature. It is quite obvious as my right hon. and learned Friend has said, it can easily and rapidly escape the effect of this decision merely by giving it on another day. Not only that, I submit that it is a technical absurdity. There is no other profit accruing out of office like this.
It is quite true that the law as it exists was intended to cover cases where you had profits accruing out of office which was not definitely agreed to as part of the contract. But surely this decision is a decidedly different one. You are dealing first of all with a number of persons who are for the most part extremely poor, probably the poorest of all classes of professional men, I would even say with due respect to some of my friends poorer than a good many skilled workmen, and the very purpose of this is to supplement that very inadequate stipend by voluntary gifts. It is said that it is a profit and must be taxed. We ask the Government not to treat this proposal with derision, but to consider very carefully whether there was not some reason why for fifty years these gifts were undisturbed until some over-enthusiastic surveyor discovered this technical means of reducing this voluntary gift. From 1840 to 1907 gifts of this type were untaxed, and by this highly technical decision it has now imposed upon it a disability, and we do ask the Government to say that in future these Easter offerings voluntarily paid to ministers of religion should be exempt from taxation. For that purpose I have great pleasure in supporting the Motion.

Mr. GUINNESS: I am sure no Government could treat this matter in the spirit suggested, and I am equally sure it will command the sympathy of every Member of this House. [An HON. MEMBER: "No!"] I believe it does, because if people have no religion they must appreciate that, whereas other members of the community, with the rapidly soaring prices and increases paid during the War, got something to compensate them, higher wages, these ministers in many cases were left to take the extra burden with no increase at all. The condition laid down in 1909 by the House of Lords was that these ministers were liable to Income Tax, and that the
gifts were profits accruing by reason of their office. The hon. and learned Member for South-East Leeds (Sir H. Slesser) has just stated it was raised incidentally owing to the zeal of some Income Tax official. Since then it has been considered by an impartial tribunal, and the Royal Commission on Income Tax gave a good deal of attention to this particular claim. They said:
It is in our opinion impossible to ignore the plain sense of the position, which is that Easter offerings are paid to a clergyman because he is a clergyman and only so long as he remains a clergyman. Of two incumbents with emoluments and income otherwise equal, one of whom receive £100 from Easter offerings and the other nothing, to pretend that the taxable ability of the first is not greater than that of the second is to shut one's eyes to reality and give undue weight to a natural sentiment.
After all these Easter offerings are not haphazard donations. They are regular and reliable. [An HON. MEMBER: "No."] Just let me develop my reasons for saying that. I probably know less than hon. Members and am open to correction. I say they are regular and reliable. In giving my reasons for saying that I do not profess to have the knowledge which hon. Members who contradict me have. I sent for "Crockford" only a few minutes ago, and I find in "Crockford" Easter offerings are put down at a certain figure. I take one case at random.

Sir H. SLESSER: "Crockford" is not evidence.

Mr. GUINNESS: Why not? I should have thought it was evidence as to the expectancy of Easter offerings. Surely they would not put in Easter offerings in all those cases unless they were more or less to be expected. I have here the case of a living where the gross income is £429 and the Easter offerings £53. Here is another instance, on the same page, with a gross income of £390, but this poorer living does not enjoy a larger income from Easter offerings; it only enjoys an Easter offering of £2. Obviously, if we are going to exclude Easter offerings from our assessment of the capacity to pay, we shall make even greater hardships as between the richer and poorer livings.

Mr. D. HERBERT: Can the right hon. Gentleman say whether Crockford states what is the meaning of this statement, whether it is an average or not?

Mr. GUINNESS: I am afraid I have not looked into that. I admit I have not, but I thought it was admitted that Crockford was an authority on the subject and I only give it for what it is worth, that Easter offerings are no doubt a part of the expectation of income of any incumbent receiving them. I agree that it may be only an average, but I do not think that really affects the point that, once you get away from really assessing liability to Income Tax, you are landed in all kinds of difficulties, injustices and complications. It is quite true, as the right hon. Member for Cambridge University. (Mr. Rawlinson) stated, in moving the Clause, that the cost of it in this form would be negligible. I do not believe it would amount to more than £15,000 a year, but I cannot believe that it would remain at that, because, after all, there are other denominations, which do not now have Easter offerings at all. If there were this exception, they could transfer their remuneration from existing methods to that of Easter offerings. I believe that it would be certain to apply to Nonconformists, and nobody could blame them. In fact, it would be perfectly natural and legitimate if, under the protection of this Clause, they avoided—it would not be evaded—Income Tax by transferring their payment to the form of Easter offerings.

Mr. RAWLINSON: The difficulty there is that, as it is now, a Nonconformist minister, rightly, has a contract of service at so much a year. [An HON. MEMBER: "There is no general contract."] There is certainly an arrangement as to the remuneration, and if a voluntary offering were put up after that, I should have no objection.

Mr. GUINNESS: I have no doubt the right hon. Gentleman is accurate as to the existing system, but I cannot think that that system would long survive the temptation of a transformation, nor can I believe that the Roman Catholic priests, who now enjoy incomes merely from voluntary offerings, would long deprive themselves of advantage under this proposed concession. After all, the right hon. Gentleman quite frankly told us that Members of this House had talked to him about how you could evade Income Tax, and we have to recognise the fact that if, with the best of motives, we give concessions which are not watertight,
people will stretch them to their utmost capacity. I do not think it would be reasonable or in the interests of the respect which we all feel for ministers of religion, to encourage them in a way like this towards the legal evasion of paying Income Tax like everybody else, and I believe we have made a far wiser contribution to the hard lot of ministers of religion, and other people with small earned incomes, by the remissions which we have made this year, which are not limited to a particular class like ministers of religion, or to a particular category of incomes like Easter offerings. For these reasons, much as I sympathise with the object of helping these struggling ministers, whose financial situation, pitiable in the extreme, is left very much as it was before the War, in spite of the increased cost of living, I regret that, for reasons of head rather than of heart, I am obliged to ask the House to reject the Clause.

Lord HUGH CECIL: I cannot think that what my right hon. Friend said is very convincing. He argues that, because ministers, according to legal right, receive certain incomes which resemble in amount, and in the purpose for which they are applied, Easter offerings, and are taxed upon them, it is unreasonable to exempt from taxation what is really a voluntary gift. Surely the true distinction for the purpose of the Income Tax—and, I thought, the distinction that was made right through the incidence of the Income Tax—is between a voluntary gift and an income upon which you can rely by law and recover, if necessary, from the persons owing it. For example, supposing a rich man gives an allowance to a son of £500 a year. The son is exempt from Income Tax as long as it is only an allowance, but when the rich man dies and leaves securities to the son bringing in precisely the same income, the son becomes liable to Income Tax, although the income is no larger, perhaps, than it was before.

Mr. GUINNESS: The income never escaped; the father paid it.

Lord H. CECIL: So do the people who make Easter offerings. The whole theory of Income Tax seems incoherent if you think of it like that. It strikes in here and there, in the perpetual course of
wealth, round and round, and the moment you begin to pursue the individual piece of money in its passage from pocket to pocket, you get into a complete state of chaos. The idea of Income Tax is that people are taxed on the income which is legally theirs, the income to which they have a legal right in the Courts of Law, but where it is a purely voluntary gift, no tax ought to be levied, and obviously it is quite a different thing, because, in the case of Easter offerings, a man cannot count on them. If he quarrels with his parishioners, or if he is not a successful preacher, whereas the previous incumbent was a successful preacher, the Easter offerings may, and in point of fact do, go down, and he cannot count on them. People are perfectly free in the matter, and they can give or they can withhold as they like. I myself give an Easter offering, but it is voluntary, and if I happen to be forgetful it is not given till later in the year, and I do not know if it counts as an Easter offering when it is not given, say, till June. Perhaps it does not, but it is a perfectly voluntary payment, which anybody may make or withhold, and it seems to me that that is the true distinction.
When I am told that Nonconformists and Roman Catholics would be equally entitled to the concession, I say they should be if they are really voluntary payments, and if really it is open to people to give or to withhold them. If you go into the market and say: "I will hire your services as a minister of religion and promise you so much," that, of course, is a legally enforceable contract which you may be required to fulfil, and accordingly the income dependent on it is a legal income, and not a voluntary gift. But if a minister of a Nonconformist chapel, or a Roman Catholic minister, takes his office relying on the goodwill of his people, I think he ought to be exempt, because he has no security, and depends from year to year on what people choose to give him, and any change of circumstances would naturally impoverish him. I do not think the argument of the right hon. Gentleman really convinces, and it is rather foolish of the Treasury to go on year after year opposing a concession which would cost them very little, and is very invidious to refuse. They draw a distinction which no others but themselves seem to see,
and enforce it against taxpayers who are the object, as my right hon. Friend him self has justly said, of general sympathy. Accordingly, I cannot help thinking that we should do a kindness to the Government if we overruled them. Probably the Members of the Government care nothing about it. It is the decision of the Treasury to which they give expression, and I suggest to my hon. Friends that they would do wisely, and, in the end, kindly, by the Government, if they vote against them on this occasion, and carry the Clause which my right hon. and learned Friend has so ably put forward.

Mr. D. HERBERT: I, too, am very disappointed with the position the Government have taken up with regard to this matter. It is an old grievance, brought forward year after year, and we always get the same kind of argument, that, if the concession be made, advantage will be taken of it. We now have got a Government who hope to remain in office several years, and I trust, when another year comes, they will themeslves draft a Clause which will be watertight, and cannot be stretched for purposes for which it is not intended. The right hon. Gentleman, who has referred to a rich man making an allowance to his son, and afterwards making a settlement, has drawn attention to an argument which affects this matter. The most wealthy people in a parish, we will say, bind themselves together to become parties to a scheme under which they undertake to find so much a year. That can be deducted from income. It is only one of many ways where people can avoid payment of the tax. A great objection to this that it offends against one of the best canons of taxation, in view of the absolute uncertainty and consequent unfairness with which it can be collected. There is not the least doubt that an immense amount of this money, which we call Easter offerings, does avoid taxation at the present time by methods which every party concerned, the party paying and the party receiving, firmly believes to be good according to law.
It seems to me it would not be very difficult to draw up some Clause which should exempt purely voluntary payments which
are not those upon the security of which the Minister accepts his office. That is a very wide way of putting it, but I cannot help thinking a Clause might be drawn up which would meet that particular point. As the law stands at present, the thing is almost too absurd for words. The rich man at Christmas-time gives Christmas boxes to his neighbours and friends, his gamekeeper or his butler, but if he chooses to give an offering to the man who happens to be the parson of the parish it it treated differently. I hope the Government at least will see their way before another year comes to bring forward on their own motion some Clause which will exempt from taxation purely voluntary payments which are not really relied upon with any certainty by the recipient when he accepts his office.

Mr. D. GRENFELL: I wish to give some reason for opposing the Amendment. I do not see why a Nonconformist minister, who gets £400 a year, should be taxed on, say, £200, while, at the same time, a minister of the Church of England or the Church of Wales who draws the same income, should only be taxed on £100, because one gets it in the form of Easter offerings. He enjoys the same standard of living. It is paid to him as a condition of his service in the church. I do not see why any church should be given a preference in this way. I hope I shall not be thought irreverant if I connect the system of tipping with Easter offerings, but the question has occurred to me that a very popular waiter in a high-class restaurant who gets an income, say, of £2 or £3 a week, and makes £5, £6 or even £10 a week in tips in addition, what kind of account would he submit for Income Tax purposes? Will he be exempted because they are voluntary offerings? It is an invidious distinction to make between one form of income and another. As one brought up in a country where Nonconformity has prevailed, and where the spirit of Nonconformity exists at the present time, I oppose this Clause.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 109; Noes, 260.

Division No. 198.]
AYES.
[9.11 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Hayes, John Henry
Rose, Frank H.


Adamson, W. M. (Staff., Cannock)
Henderson, Rt. Hon. A. (Burnley)
Saklatvala, Shapurji


Alexander, A. V. (Sheffield, Hillsbro')
Henderson, T. (Glasgow)
Scrymgeour, E.


Ammon, Charles George
Hirst, G. H.
Shaw, Rt. Hon. Thomas (Preston)


Attlee, Clement Richard
Hirst, W. (Bradford, South)
Short, Alfred (Wednesbury)


Baker, J. (Wolverhampton, Bilston)
Hore-Belisha, Leslie
Slesser, Sir Henry H.


Barker, G. (Monmouth, Abertillery)
Hudson, J. H. (Huddersfield)
Smillie, Robert


Barnes, A.
Hutchison, Sir Robert (Montrose)
Smith, Ben (Bermondsey, Rotherhithe)


Barr, J.
Jenkins, W. (Glamorgan, Neath)
Smith, H. B. Lees (Keighley)


Batey, Joseph
John, William (Rhondda, West)
Smith, Rennie (Penistone)


Beckett, John (Gateshead)
Johnston, Thomas (Dundee)
Snell, Harry


Benn, Captain Wedgwood (Leith)
Jones, Henry Haydn (Merioneth)
Spencer, G. A. (Broxtowe)


Bowerman, Rt. Hon. Charles W.
Jones, Morgan (Caerphilly)
Stamford, T. W.


Broad, F. A.
Jones, T. I. Mardy (Pontypridd)
Stephen, Campbell


Charleton, H. C.
Kelly, W. T.
Sutton, J. E.


Clynes, Rt. Hon. John R.
Kennedy, T.
Taylor, R. A.


Collins, Sir Godfrey (Greenock)
Kenyon, Barnet
Thomas, Rt. Hon. James H. (Derby)


Connolly, M.
Lansbury, George
Thomson, Trevelyan (Middlesbro. W.)


Cove, W. G.
Lawson, John James
Thorne, G. R. (Wolverhampton, E.)


Crawfurd, H. E.
Livingstone, A. M.
Thurtle, E.


Dalton, Hugh
Lowth, T.
Tinker, John Joseph


Day, Colonel Harry
Lunn, William
Varley, Frank B.


Dennison, R.
Mackinder, W.
Viant, S. P.


Duncan, C.
MacLaren, Andrew
Walsh, Rt. Hon. Stephen


Edwards, John H. (Accrington)
Maclean, Neil (Glasgow, Govan)
Warne, G. H.


Evans, Capt. Ernest (Welsh Univer.)
March, S.
Watson, W. M. (Dunfermline)


Forrest, W.
Maxton, James
Watts-Morgan, Lt.-Col. D. (Rhondda)


Garro-Jones, Captain G. M.
Mitchell, E. Rosslyn (Paisley)
Webb, Rt. Hon. Sidney


George, Rt. Hon. David Lloyd
Montague, Frederick
Wedgwood, Rt. Hon. Josiah


Gillett, George M.
Morris, R. H.
Westwood, J.


Gosling, Harry
Morrison, R. C. (Tottenham, N.)
Whiteley, W.


Graham, D. M. (Lanark, Hamilton)
Naylor, T. E.
Williams, David (Swansea, East)


Greenall, T.
Oliver, George Harold
Williams, T. (York, Don Valley)


Grenfell, D. R. (Glamorgan)
Palin, John Henry
Wilson, R. J. (Jarrow)


Groves, T.
Paling, W.
Windsor, Walter


Grundy, T. W.
Parkinson, John Allen (Wigan)
Wright, W.


Guest, J. (York, Hemsworth)
Pethick-Lawrence, F. W
Young, Robert (Lancaster, Newton)


Guest, Dr. L. Haden (Southwark, N.)
Ponsonby, Arthur



Hall, F. (York, W.R., Normanton)
Potts, John S.
TELLERS FOR THE AYES.—


Hardie, George D.
Richardson, R. (Houghton-le-Spring)
Mr. T. Griffiths and Mr. George Hall.


Harris, Percy A.
Riley, Ben



Hayday, Arthur
Roberts, Rt. Hon. F. O. (W. Bromwich)



NOES.


Acland-Troyte, Lieut.-Colonel
Elveden, Viscount
Malone, Major P. B.


Agg-Gardner, Rt. Hon. Sir James T.
Erskine, Lord (Somerset, Weston-s.-M.)
Manningham-Buller, Sir Mervyn


Albery Irving James
Erskine, James Malcolm Monteith
Merriman, F. B.


Ashmead-Bartlett, E.
Everard, W. Lindsay
Meyer, Sir Frank


Astor Viscountess
Fairfax, Captain J. G.
Milne, J. S. Wardlaw-


Atholl Duchess of
Falle, Sir Bertram G.
Mitchell, Sir W. Lane (Streatham)


Baldwin Rt. Hon. Stanley
Fielden, E. B.
Monsell, Eyres, Com. Rt. Hon. B. M.


Balfour George (Hampstead)
Finburgh, S.
Moore, Lieut.-Colonel T. C. R. (Ayr)


Balniel, Lord
Fleming, D. P.
Moore, Sir Newton J.


Banks, Reginald Mitchell
Ford, P. J.
Moore-Brabazon, Lieut.-Col. J. T. C.


Barclay-Harvey C. M.
Forestier-Walker, Sir L.
Morden, Colonel Walter Grant


Barnett Major Richard
Foster, Sir Harry S.
Morrison, H. (Wilts, Salisbury)


Beamish Captain T. P. H.
Foxcroft, Captain C. T.
Murchison, C. K.


Bennett, A. J.
Ganzonl, Sir John
Nail, Lieut.-Colonel Sir Joseph


Bentinck, Lord Henry Cavendish-
Gates, Percy
Nelson, Sir Frank


Berry, Sir George
Gibbs, Col. Rt. Hon. George Abraham
Newman, Sir R. H. S. D. L. (Exeter)


Bethell, A.
Goff, Sir Park
Nicholson, O. (Westminster)


Betterton Henry B.
Gower, Sir Robert
Nuttall, Ellis


Bird, E. R. (Yorks, W R., Skipton)
Grace, John
Oakley, T.


Blades, Sir George Rowland
Greene, W. P. Crawford
O'Connor, T. J. (Bedford, Luton)


Blundell, F. N.
Gretton, Colonel John
O'Neill, Major Rt. Hon. Hugh


Boothby, R. J. G.
Grotrian, H. Brent
Oman, Sir Charles William C.


Bourne, Captain Robert Croft
Guinness, Rt. Hon. Walter E.
Pennefather, Sir John


Bowater, Sir T. Vansittart
Gunston, Captain D. W.
Penny, Frederick George


Bowyer, Capt. G. E. W.
Hacking, Captain Douglas H.
Paring, William George


Boyd-Carpenter, Major A.
Hall, Lieut.-Col. Sir F. (Dulwich)
Peto, Basil E. (Devon, Barnstaple)


Bridgeman, Rt. Hon. William Clive
Hall, Capt. W. D'A. (Brecon & Rad.)
Pilditch, Sir Philip


Briscoe, Richard George
Hammersley, S. S.
Preston, William



Hannon, Patrick Joseph Henry
Price, Major C. W. M.


Brittain, Sir Harry
Harland, A.
Rawlinson, Rt. Hon. John Fredk Peel


Brocklebank, C. E. R.




Brooke, Brigadier-General C. R. I.
Harrison, G. J. C.
Reid, Capt. A. S. C. (Warrington)


Broun-Lindsay, Major H.
Harvey, G. (Lambeth, Kennington)
Reid, D. D. (County Down)


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Harvey, Major S. E. (Devon, Totnes)
Remnant, Sir James



Haslam, Henry C.
Rhys, Hon. C. A. U.


Buckingham Sir H.
Hawke, John Anthony
Rice, Sir Frederick


Bull, Rt. Hon. Sir William James
Henderson, Capt. R. R. (Ocf'd, Henley)
Richardson, Sir P. W. (Sur'y, Ch'ts'y)


Burman, J. B.
Henderson, Lieut.-Col. V. L. (Bootle)
Roberts, Samuel (Hereford, Hereford)


Burney, Lieut.-Com. Charles D.
Heneage, Lieut.-Col. Arthur P.
Ruggles-Brise, Major E. A.


Burton Colonel H. W.
Henn, Sir Sydney H.
Russell, Alexander West (Tynemouth)


Butler, Sir Goffrey
Hennessy, Major J. R. G.
Rye, F. G.


Cadogan, Major Hon. Edward
Henniker-Hughan, Vice-Adm. Sir A.
Salmon, Major I.


Caine, Gordon Hall
Herbert, Dennis (Hertford, Watford)
Samuel, A. M. (Surrey, Farnham)


Campbell, E. T.
Herbert, S. (York, N. R-,Scar. & Wh'by)
Samuel, Samuel (W'dsworth, Putney)


Cassels, J. D.
Hogg, Rt. Hon. Sir D. (St. Marylebone)
Sanderson, Sir Frank


Cautley, Sir Henry S.
Holbrook, Sir Arthur Richard
Sassoon, Sir Philip Albert Gustave D.


Cayzer, Sir C. (Chester, City)




Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)
Homan, C. W. J.
Savert, S. S.


Cecil, Rt. Hon. Lord H. (Ox. Univ.)
Hopkins, J. W. W.
Scott, Sir Leslie (Liverp'l, Exchange)


Chadwick, Sir Robert Burton
Hopkinson, A. (Lancaster, Mossley)
Shaw, R. G. (Yorks, W.R., Sowerby)



Horlick, Lieut.-Colonel J. N.
Shaw, Lt.-Col. A. D. Mcl. (Renfrew, W.)


Charteris, Brigadier-General J.
Howard, Capt. Hon. D. (Cumb., N.)
Shaw, Capt. W. W. (Wilts, Westb'y)


Christie, J. A.
Hudson, Capt. A. U. M. (Hackney, N.)
Shepperson, E. W.


Churchill, Rt. Hon. Winston Spencer
Hudson R. S. (Cumberland, Whiteh'n)
Simms, Dr. John M. (Co. Down)


Churchman Sir Arthur C.
Hume, Sir G. H.
Skelton, A. N.


Clarry Reginald George
Hurst, Gerald B.
Slaney, Major P. Kenyon


Cobb, Sir Cyril





Hutchison, G.A. Clark (Midl'n & P'bl's)
Smith, R.W. (Aberd'n & Kinc'dine, C.)


Cockerill Brigadier-General G. K.
Inskip, Sir Thomas Walker H.
Smith-Carington, Neville W.



Inskip, Sir Thomas Walker H.
Smith-Carington, Neville W.


Cohen, Major J. Brunel
Jackson, Lieut.-Colonel Hon. F. S.
Smithers, Waldron


Colfox, Major Wm. Phillips
Jackson, Sir H. (Wandsworth, Cen'l)
Somerville, A. A. (Windsor)


Cooper, A. Duff
Jacob, A. E.
Spender Clay, Colonel H.


Cope, Major William




Courtauld, Major J. S.
James, Lieut.-Colonel Hon. Cuthbert
Stanley, Col. Hon. G.F. (Will'sden, E.)



Jephcott, A. R.
Stanley, Lord (Fylde)


Cowan, Sir Wm. Henry (Islington, N.)
Joynson-Hicks, Rt. Hon. Sir William
Steel, Major Samuel Strang


Craig, Ernest (Chester, Crewe)
Kennedy, A. R. (Preston)
Storry Deans, R.


Craik, Rt. Hon. Sir Henry
Kidd, J (Linilthgow)
Stott, Lieut.-Colonel W. H.


Croft, Brigadier-General Sir H.
Kindersley, Major G. M.
Strickland, Sir Gerald


Crook, C. W.




Crooke, J. Smedley (Derltend)
King, Captain Henry Douglas
Sueter, Rear-Admiral Murray Fraser


Crookshank, Col. C. de W. (Berwick)
Kinloch-Cooke, Sir Clement
Sugden, Sir Wilfrid


Crookshank, Col. H. (Lindsey, Gainsbro)
Knox, Sir Alfred
Sykes Major-Gen. Frederick H.


Curtis-Bennett, Sir Henry
Lamb, J. Q.
Tasker, Major R. Inigo


Curzon, Captain Viscount
Lane-Fox, Lieut.-Col. George R.
Templeton, W. P.


Dalkeith, Earl of
Leigh, Sir John (Clapham)
Thompson, Luke (Sunderland)


Dalziel, Sir Davison
Lister, Cunliffe-, Rt. Hon. Sir Philip
Thomson, F. C. (Aberdeen, South)


Davidson, J. (Hertf'd, Hemel Hempst'd)
Locker-Lampson, G. (Wood Green)
Thomson, Sir W. Mitchell- (Croydon, S.)


Davidson, Major-General Sir John H.
Locker-Lampson, Com. O. (Handsw'th)
Tryon, Rt. Hon. George Clement


Davies Maj. Geo. F.(Somerset, Yeovil)
Loder, J. de V.
Turton, Edmund Russborough


Dawson, Sir Philip
Looker, Herbert William
Vaughan-Morgan, Col. K. P.


Dean, Arthur Wellesley
Luce, Maj.-Gen. Sir Richard Harman
Waddington, R.


Dixon Captain Rt. Hon. Herbert
MacAndrew, Charles Glen
Ward, Lt.-Col. A. L. (Kingston-on-Hull)


Doyle, Sir N. Grattan
McDonnell, Colonel Hon. Angus
Warner, Brigadier-General W. W.


Drewe, C.
Macintyre, I.
Warrender, Sir Victor


Eden, Captain Anthony
McLean, Major A.
Waterhouse, Captain Charles


Edmondson, Major A. J.
MacMillan, Captain H.
Wells, S. R.


Elliot, Captain Walter E.
Makins, Brigadier-General E.
Wheler, Major Sir Granville C. H.




White, Lieut.-Colonel G. Dairymple
Wise, Sir Fredric
Worthington-Evans, Rt. Hon. Sir L.


Williams, Com. C. (Devon, Torquay)
Wolmer, Viscount



Williams, Herbert G. (Reading)
Womersley, W. J.
TELLERS FOR THE NOES.—


Wilson, Sir C. H. (Leeds, Central)
Wood, B. C. (Somerset, Bridgwater)
Major Sir Harry Barnston and Captain Margesson.


Winby, Colonel L. P.
Wood, Sir Kingsley (Woolwich, W.)



Windsor-Clive, Lieut.-Colonel George
Woodcock, Colonel H. C.

Division No. 199.]
AYES.
[9.56 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Guest, J. (York, Hemsworth)
Preston, William


Adamson, W. M. (Staff., Cannock)
Hall, F. (York, W.R., Normanton)
Price, Major C. W. M.


Agg-Gardner, Rt. Hon. Sir James T.
Hall, G. H. (Merthyr Tydvil)
Richardson, R. (Houghton-le-Spring)


Ammon, Charles George
Hardie, George D.
Roberts, Rt. Hon. F. O. (W. Bromwich)


Attlee, Clement Richard
Hayday, Arthur
Rose, Frank H.


Baker, J. (Wolverhampton, Bilston)
Hayes, John Henry
Scrymgeour, E.


Barker, G. (Monmouth, Abertillery)
Henderson, Rt. Hon. A. (Burnley)
Shaw, Rt. Hon. Thomas (Preston)


Barnes, A.
Hirst, G. H.
Smith, Ben (Bermondsey, Rotherhithe)


Barr, J.
Hore-Belisha, Leslie
Smith-Carington, Neville W.


Batey, Joseph
Hudson, J. H. (Huddersfield)
Somerville, A. A. (Windsor)


Berry Sir George
Jenkins, W. (Glamorgan, Neath)
Spencer, G. A. (Broxtowe)


Broad, F. A.
John, William (Rhondda, West)
Stamford, T. W.


Bromley, J.
Jones, T. I. Mardy (Pontypridd)
Sutton, J. E.


Caine, Gordon Hall
Kelly, W. T.
Taylor, R. A.


Cautley, Sir Henry S.
Kennedy, T.
Thomas, Rt. Hon. James H. (Derby)


Cecil, Rt. Hon. Sir Evelyn (Aston)
Kenyon, Barnet
Trevelyan, Rt. Hon. C. P.


Cecil, Rt. Hon. Lord H. (Ox. Univ.)
Lamb, J. Q.
Varley, Frank B.


Charleton, H. C.
Lansbury, George
Viant, S. P.


Cluse, W. S.
Lowth, T.
Walsh, Rt. Hon. Stephen


Clynes, Rt. Hon. John R.
Luce, Maj.-Gen. Sir Richard Harman
Warne, G. H.


Cobb, Sir Cyril
Lunn, William
Watts-Morgan, Lt.-Col. D. (Rhondda)


Connolly, M.
Mackinder, W.
Westwood, J.


Cove, W. G.
Maclean, Neil (Glasgow, Govan)
Wheatley, Rt. Hon. J.


Crooke, J. Smedley (Deritend)
March, S.
Whiteley, W.


Day, Colonel Harry
Marriott, Sir J. A. R.
Williams, David (Swansea, East)


Dennison, R.
Mitchell, E. Rosslyn (Paisley)
Williams, Herbert G. (Reading)


Duncan, C.
Montague, Frederick
Williams, T. (York, Don Valley)


Dunnico, H.
Morrison, H. (Wilts, Salisbury)
Wilson, R. J. (Jarrow)


Edwards, C. (Monmouth, Bedwellty)
Morrison, R. C. (Tottenham, N.)
Windsor, Walter


Eiveden, Viscount
Nail, Lieut.-Colonel Sir Joseph
Windsor-Clive, Lieut.-Colonel George


Fielden, E. B.
Nicholson, Col. Rt. Hn. W.G.(Ptrsf'ld.)
Wise, Sir Fredric


Foster, Sir Harry S.
O'Connor, T. J. (Bedford, Luton)
Wright, W.


Gosling, Harry
Palin, John Henry
Young, Robert (Lancaster, Newton)


Graham, D. M. (Lanark, Hamilton)
Paling, W.



Greenall, T.
Parkinson, John Allen (Wigan)
TELLERS FOR THE AYES.—


Gretton, Colonel John
Pethick-Lawrence, F. W.
Sir Henry Slesser and Mr. Rawlinson.


Groves, T.
Ponsonby, Arthur



Grundy, T. W.
Potts, John S.





NOES.


Acland-Troyte, Lieut.-Colonel
Campbell, E. T.
Evans, Capt. Ernest (Welsh Univer.)


Alexander, A. V. (Sheffield, Hillsbro')
Cassels, J. D.
Everard, W. Lindsay


Ashmead-Bartlett, E.
Cayzer, Sir C. (Chester, City)
Fairfax, Captain J. G.


Astor, Viscountess
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Falle, Sir Bertram G.


Atholl, Duchess of
Chadwick, Sir Robert Burton
Finburgh, S.


Baldwin, Rt. Hon. Stanley
Chamberlain, Rt. Hn. J. A.(Birm., W.)
Fleming, D. P.


Balfour, George (Hampstead)
Christie, J. A.
Ford, P. J.


Balniel, Lord
Churchman, Sir Arthur C.
Forestier-Walker, Sir L.


Banks, Reginald Mitchell
Clarry, Reginald George
Forrest, W.


Barclay-Harvey, C. M.
Cockerill, Brigadier-General G. K.
Foxcroft, Captain C. T.


Barnett, Major Richard
Cohen, Major J. Brunel
Gadie, Lieut.-Col. Anthony


Beamish, Captain T. P. H.
Colfox, Major Wm. Phillips
Ganzoni, Sir John


Beckett, Sir Gervase (Leeds, N.)
Collins, Sir Godfrey (Greenock)
Gates, Percy


Beckett, John (Gateshead)
Cooper, A. Duff
Gibbs, Col. Rt. Hon. George Abraham


Bennett, A. J.
Cope, Major William
Gillett, George M.


Bentinck, Lord Henry Cavendish-
Courtauld, Major J. S.
Goff, Sir Park


Bethell, A.
Cowan, Sir Wm. Henry (Islington, N.)
Gower, Sir Robert


Betterton, Henry B.
Craig, Ernest (Chester, Crewe)
Grant, J. A.


Bird, E. R. (Yorks, W. R., Skipton)
Craik, Rt. Hon. Sir Henry
Greene, W. P. Crawford


Blades, Sir George Rowland
Croft, Brigadier-General Sir H.
Grenfell, D. R. (Glamorgan)


Blundell, F. N.
Crook, C. W.
Grotrian, H. Brent


Boothby, R. J. G.
Crookshank, Col. C. de W. (Berwick)
Guinness, Rt. Hon. Walter E.


Bourne, Captain Robert Croft
Crookshank, Col. H. (Lindsey, Gainsbro)
Gunston, Captain D. W.


Bowater, Sir T. Vansittart
Curtis-Bennett, Sir Henry
Hacking, Captain Douglas H.


Bowerman, Rt. Hon. Charles W.
Curzon, Captain Viscount
Hall, Lieut.-Col. Sir F. (Dulwich)


Bowyer, Capt. G. E. W.
Dalkeith, Earl of
Hall, Capt. W. D'A. (Brecon & Rad.)


Boyd-Carpenter, Major A.
Dalziel, Sir Davison
Hammersley, S. S.


Bridgeman, Rt. Hon. William Clive
Davidson, J. (Hertl'd, Hemel Hempst'd)
Hannon, Patrick Joseph Henry


Briscoe, Richard George
Davidson, Major-General Sir John H.
Harland, A.


Brittain, Sir Harry
Davies, Maj. Geo. F.(Somerset, Yeovil)
Harris, Percy A.


Brocklebank, C. E. R.
Dawson, Sir Philip
Harrison, G. J. C.


Brooke, Brigadier-General C. R. I.
Dean, Arthur Wellesley
Harvey, C. (Lambeth, Kennington)


Broun-Lindsay, Major H.
Dixon, Captain Rt. Hon. Herbert
Harvey, Major S. E. (Devon, Totnes)


Brown, Brig.-Gen. H. C.(Berks, Newb'y)
Doyle, Sir N. Grattan
Haslam, Henry C.


Buckingham, Sir H.
Drewe, C.
Hawke, John Anthony


Bull, Rt. Hon. Sir William James
Eden, Captain Anthony
Henderson, Capt. R. R. (Oxf'd, Henley)


Burman, J. B.
Edmondson, Major A. J.
Henderson, Lieut.-Col. V. L. (Bootle)


Burney, Lieut.-Com. Charles D.
Edwards, John H. (Accrington)
Heneage, Lieut.-Col. Arthur P.


Burton, Colonel H. W.
Elliot, Captain Walter E.
Henn, Sir Sydney H.


Butler, Sir Geoffrey
Erskine, James Malcolm Monteith
Hennessy, Major J. R. G.


Cadogan, Major Hon. Edward
Erskine, Lord (Somerset, Weston-s.-M.)
Henniker-Hughan, Vice-Adm. Sir A.




Herbert, S. (York, N.R-,Scar. & Wh'by)
Meyer, Sir Frank
Smillie, Robert


Hoare, Lt.-Col. Bt. Hon. Sir S. J. G.
Milne, J. S. Wardlaw-
Smith, H. B. Lees- (Keighley)


Hogg, Rt. Hon. Sir D. (St. Marylebone)
Mitchell, Sir W. Lane (Streatham)
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Holbrook, Sir Arthur Richard
Monsell, Eyres, Com. Rt. Hon. B. M.
Smithers, Waldron


Homan, C. W. J.
Moore, Lieut.-Colonel T. C. R. (Ayr)
Spender Clay, Colonel H.


Hopkins, J. W. W.
Moore, Sir Newton J.
Stanley, Col. Hon. G.F. (Will'sden, E.)


Hopkinson, A. (Lancaster, Mossley)
Moore-Brabazon, Lieut.-Col. J. T. C.
Stanley, Lord (Fylde)


Horlick, Lieut.-Colonel J. N.
Morden, Colonel Walter Grant
Stanley, Hon. O. F. G. (Westm'eland)


Howard, Capt. Hon. D. (Cumb., N.)
Morris, R. H.
Steel, Major Samuel Strang


Hudson, Capt. A. U. M. (Hackney, N.)
Murchison, C. K.
Storry Deans, R.


Hudson, R. S. (Cumberland, Whiteh'n)
Naylor, T. E.
Stott, Lieut.-Colonel W. H.


Hume, Sir G. H.
Nelson, Sir Frank
Strickland, Sir Gerald


Hutchison, G. A. Clark (Midl'n & P'bl's)
Nicholson, O. (Westminster)
Sueter, Rear-Admiral Murray Fraser


Hutchison, Sir Robert (Montrose)
Nuttall, Ellis
Sugden, Sir Wilfrid


Iliffe, Sir Edward M.
Oakley, T.
Sykes, Major-Gen. Sir Frederick H.


Inskip, Sir Thomas Walker H.
O'Neill, Major Rt. Hon. Hugh
Templeton, W. P.


Jackson, Lieut.-Colonel Hon. F. S.
Penny, Frederick George
Thompson, Luke (Sunderland)


Jackson, Sir H. (Wandsworth, Cen'l)
Perring, William George
Thomson, F. C. (Aberdeen, South)


Jacob, A. E.
Peto, Basil E. (Devon, Barnstaple)
Thomson, Sir W. Mitchell- (Croydon, S.)


James, Lieut.-Colonel Hon. Cuthbert
Pilditch, Sir Philip
Thomson, Trevelyan (Middlesbro. W.)


Jephcott, A. R.
Rees, Sir Beddoe
Thurtle, E.


Jones, Henry Haydn (Merioneth)
Reid, Capt. A. S. C. (Warrington)
Tryon, Rt. Hon. George Clement


Jones, Morgan (Caerphilly)
Reid, D. D. (County Down)
Turton, Edmund Russborough


Joynson-Hicks, Rt. Hon. Sir William
Remnant, Sir James
Vaughan-Morgan, Col. K. P.


Kennedy, A. R. (Preston)
Rhys, Hon. C. A. U.
Waddington, R.


Kidd, J. (Linilthgow)
Rice, Sir Frederick
Wallace, Captain D. E.


King, Captain Henry Douglas
Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Ward, Lt.-Col. A. L.(Kingston-on-Hull)


Kinloch-Cooke, Sir Clement
Ropner, Major L.
Warner, Brigadier-General W. W.


Knox, Sir Alfred
Russell, Alexander West (Tynemouth)
Warrender, Sir Victor


Lane-Fox, Lieut.-Col. George R.
Rye, F. G.
Waterhouse, Captain Charles


Leigh, Sir John (Clapham)
Saklatvala, Shapurji
Watson, W. M. (Dunfermline)


Lister, Cunliffe-, Rt. Hon. Sir Philip
Salmon, Major I.
Wells, S. R.


Locker-Lampson, G. (Wood Green)
Samuel, A. M. (Surrey, Farnham)
White, Lieut.-Colonel G. Dairymple


Looker-Lampson, Com. O. (Handsw'th)
Samuel, Samuel (W'dsworth, Putney)
Williams, Com. C. (Devon, Torquay)


Loder, J. de V.
Sanders, Sir Robert A.
Wilson, Sir C. H. (Leeds, Central)


Looker, Herbert William
Sanderson, Sir Frank
Winby, Colonel L. P.


Lumley, L. R.
Sassoon, Sir Philip Albert Gustave D.
Wolmer, Viscount


Mac Andrew, Charles Glen
Savery, S. S.
Womersley, W. J.


McDonnell, Colonel Hon. Angus
Scott, Sir Leslie (Liverp'l, Exchange)
Wood, B. C. (Somerset, Bridgwater)


Macintyre, I.
Shaw, R. G. (Yorks, W.R., Sowerby)
Wood, Sir Kingsley (Woolwich, W.)


McLean, Major A.
Shaw, Lt.-Col. A. D. Mcl.(Renfrew, W)
Woodcock, Colonel H. C.


MacMillan, Captain H.
Shaw, Capt. W. W. (Wilts, Westb'y)
Worthington-Evans, Rt. Hon. Sir L.


Maitland, Sir Arthur D. Steal-
Sheffield, Sir Berkeley
Young, E. Hilton (Norwich)


Makins, Brigadier-General E.
Shepperson, E. W.



Malone, Major P. B.
Simms, Dr. John M. (Co. Down)
TELLERS FOR THE NOES.—


Manningham-Buller, Sir Mervyn
Skelton, A. N.
Major Sir Harry Barnston and


Merriman, F. B.
Slaney, Major P. Kenyon
Captain Margesson.

NEW CLAUSE.—(Amendment of 10 Edw. VII, c.8.)

Notwithstanding anything contained in this or any other Act to the contrary, the Finance (1909–10) Act, 1910, Schedule I (c) (Provisions applicable to retailers' off-licences, Spirits; (2) Mininmum quantity of spirits to be sold), shall be deemed to have effect, as if, in lieu of the words "one reputed quart bottle" there were inserted the words "one reputed pint bottle," and accordingly the minimum quantity which may be sold by a person holding an off-licence to be held by a retailer of spirits shall be in England one reputed pint bottle.—[Lieut. Colonel James.]

Brought up, and read the First time.

Lieut.-Colonel JAMES: I beg to move, "That the Clause be read a Second time."
I do not wish to detain the House with long arguments. Last year about this time I supported a similar proposal. This Clause has two main sides, first, the financial side, and, secondly, the administrative side. With regard to the financial side, the Clause should cause no
loss of revenue to the Exchequer, any more than, I believe, it would produce any increase of revenue; so in that respect matters will remain very much as they are. As regards the administrative side, no doubt arguments can be produced for and against the Amendment. Against the Amendment it is argued by Members such as the Noble Lady for Plymouth (Viscountess Astor) that this half-bottle Regulation, a child of D.O.R.A., was wished for by the country during the War to prevent a habit of "nipping" amongst women in munition factories. It is some years since the War ended; it is some years since we had large gatherings of women working in munition factories under specially nerve-racking conditions, which no longer exist. I would also say, surely the Noble Lady can trust her own sex a little to look after themselves? I believe this particular restriction to be no longer necessary, and it certainly is exceedingly irksome. Only this afternoon an hon.
Member of this House told me that while coming up from the country to-day, and passing through a town about 25 miles from London, he had come across a woman by the side of the road who had fallen off her bicycle and was very ill. It was a quarter of an hour before he could get any brandy to give to the woman. He had not got any in his car, and the closing hours prevented his getting any. In 20 minutes the woman was dead. [Interruption.] It is suggested by the Noble Lady the Member for Plymouth that she would have been dead anyhow. I do not think that is a fair or reasonable argument. I wish to avoid personalities. I do not wish to have to reply to the sort of arguments which are occasionally used against me, but perhaps I will do so now, in order that I may make a definite denial. The Noble Lady has occasionally reproached me on public platforms and in this House with being a servant and a slave of the licensed trade. I deny that totally. I hold no interest, direct or indirect, in it. I have told her so already, and I repeat it in public. Her remark, when I told her so before, was, "You have dinners with them." Does she honestly think I have sold myself for the price of a dinner?

Viscountess ASTOR: On a point of Order. Has this got anything to do with the Amendment—for the hon. Member to get up here, and attack me before I have opened my mouth?

Mr. SPEAKER: As far as I heard, the hon. and gallant Member was trying to defend himself.

Viscountess ASTOR: From what was he defending himself? I have not attacked him yet.

Mr. SPEAKER: I am glad to hear it. We can now deal with the Amendment on its merits.

Mr. MAXTON: On a point of Order. Is the speech the hon. and gallant Gentleman is making in order on an Amendment which deals with Easter offerings?

Mr. SPEAKER: The House has just concluded the question of Easter offerings.

Lieut. - Colonel JAMES: After that slight diversion I will endeavour to resume. With regard to the administra-
tive side of the problem, there are certain interests which, I believe, are opposed to this proposal. I refer particularly to certain branches of the licensed victuallers' trade, who, I believe, oppose it because they say that if the Clause is passed they will suffer disadvantages in regard to the off-licence holder.
I support this Amendment not for any sectional interest, but in the public interest. It seems to me to be a gross hardship that a man or woman who desires to obtain a small quantity of any excise-able article should not be allowed to get it. If this particular Regulation were logical, were reasonable and not intolerable, would there be any objection to insisting that a poor woman who desired to buy tea at the grocers should be forbidden to buy a less quantity than, say, half a pound. The arguments which have been used in regard to the latter case are just as strong as they are in this case. Suppose one introduced Amendments into future Finance Bills to say that cigars could be sold only 50 at a time, and suppose Members went to an official called, say, Collins, and said, "Collins, give me a cigar," and he replied, "I can only serve you with 50." We should regard that as grotesque and ridiculous. That is very much my view of the present Regulation. It is a War-time Regulation which has outlived its utility. So far from this being an unnecessary Clause, I believe it will make a very necessary amendment in the law. Take the case of an agricultural labourer, with his miserable wage, who has sickness in the house. If the doctor says to him, "Your wife must have brandy," and he goes to the local grocer, he finds that he cannot buy a half-bottle of brandy for his sick wife, but is compelled to pay 12s. 6d. for a bottle of rather inferior brandy for her. He cannot afford it. It may not be worth it and at the same time it is a very severe drain on his weekly wage, and surely it is better to get half a bottle instead of having to do as he has to do at present. Now he has to buy a bottle, and after giving the invalid the necessary amount, instead of restoring the cork and keeping the spirit there is a tendency to drink it all at once instead of wasting it. I do urge the Secretary for the Treasury to give this new Clause full and careful consideration, because I believe
it has a large body of support in this House and outside. For these reasons I trust the Chancellor of the Exchequer will be able to meet us in a satisfactory way.

Mr. SCRYMGEOUR: rose—

Mr. SPEAKER: Does the hon. Gentleman rise to second this Motion?

Mr. SCRYMGEOUR: No, I do not.

Colonel CROOKSHANK: Does this Amendment apply only to England, and not to Scotland?

Major HARVEY: I beg formally to second the Motion.

Mr. GUINNESS: As the hon. and gallant Member for Bromley (Lieut.-Colonel James) has said, there is no money in this new Clause, which divides itself into two parts, the revenue side and the administrative side. Although the revenue side is of little importance, on the administrative side this proposal has had rather a long and chequered career. I am afraid the hon. and gallant Member is wrong in thinking it dates merely from D.O.R.A. It has a more hoary record. D.O.R.A. made certain Amendments with regard to the selling of spirits off the premises, but we have now reverted to the position of "As you were" as regards all these D.O.R.A. Drink Regulations. The particular Regulation to which the Mover of this new Clause has drawn attention dates back to 1861 to Mr. Gladstone's time, and Mr. Gladstone provided that the off-licence holder should not be entitled to supply spirits in less quantities than a quart.
The matter was left at that until 1909, when the Liberal party, in their famous People's Budget, brought forward a proposal to level Scotland up to a half-bottle limit and to bring England down to the same figure. A good deal of controversy was excited, and the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) found it advisable to make a strategic movement to the rear, with the result that the matter, as regards England, was left exactly as it was before. Scotland, however, enjoyed the Amendment, levelling it up to the half-bottle, whereas up to that time they had been allowed to sell spirits in any quantity they chose. The legislation of 1909, while dropping the proposal to bring down the limit in
England, actually raised the limit in Scotland. Since then the matter has been raised on two or three occasions, and, from the way in which my two hon. Friends on this side of the House fell out to-night—the hon. and gallant Member for Bromley (Lieut.-Colonel James) and the Noble Lady the Member for the Sutton Division of Plymouth (Viscountess Astor)—I fear that the old antipathies might easily be again aroused on this vexed question.
That, however, is not to prejudge the issue; it is only to say that it needs a good deal of examination. As the hon. and gallant Member who moved the Amendment pointed out, it has a very important administrative side, which affects the Home Office, and not merely the Treasury. In fact, I think it is a matter in which the Home Office probably has more definite views than the Department that is merely concerned with a non-existent financial side of the matter; and there is also the trade side of the matter. There are various interests, which have not been consulted, and for these reasons it is out of the question for the Government to-night to express any considered view on this difficult question, with its long and chequered Parliamentary history. All I can say is that we will give it very careful consideration; we will consult the other interests concerned, especially the Home Office; and we hope to be able to give a more definite and considered opinion if it is brought up on another occasion, perhaps on the Finance Bill next year.

Lieut.-Colonel JAMES: I beg to ask leave to withdraw.

Mr. SCRYMGEOUR: I would like to take this opportunity of speaking on this question. The appeal of the hon. and gallant Member for Bromley (Lieut.-Colonel James) is evidently going to have serious consideration by the Treasury, and if that be so I should certainly contend that it deserves to be considered on its merits and demerits as a whole, and not simply as a sectional and altogether unimportant matter, as suggested by the hon. and gallant Member. The real question is not the size of the bottle that may be sold; it is the contents of the bottle. I am quite well aware that this question has, for very nearly the last century in this House, been received almost invari-
ably with an undue exhibition of the sense of humour. There is no room for treating this matter in a humourous vein in a House which has very grave reason to consider the effects of the particular issue as they see it in the House itself. [HON. MEMBERS: "Withdraw!"] I am agreeable to the withdrawal of the drink from the House if that is what you want to withdraw. What I am speaking of is the seriousness of the question as it really presents itself to the House at any time. We are quite well aware that the results sometimes present a ludicrous aspect. When you look behind the ostensible view and see the realism that lies behind it you begin to realise that points such as those introduced by the hon. Member are a mere bagatelle contrasted with the vital character of the question itself. What difference could this make on the real question at issue if the hon. Member's proposition is adopted and we revert to the opportunity of the retail dealer handling supplies in this way? He has made the suggestion that the Noble Lady the Member for the Sutton Division (Viscountess Astor) should allow women folk to look after themselves. I would strongly commend that recommendation to the hon. Member and those whom he represents in the trade, that if the women are allowed to look after themselves without the use of this concoction he will find a better womanhood in the country and better development of the country at large in its widest aspects, but to set specifically limited opportunities for the seduction of women, to traduce women and cast them on the streets as prostitutes by the production of such a concoction, is a diabolical act.

Mr. SPEAKER: The hon. Member cannot on this Amendment go into the whole question of the liquor trade and its good or evil. The only question is the bottle or half-bottle.

Mr. SCRYMGEOUR: I bow to your decision, Sir, and the very phraseology in which you have directed my attention to the situation proves the special point I want to make, that you are so circumscribed in dealing with this question by various limitations of the procedure of the House that the biggest question you have to face is compressed on every occasion
almost into such a limited scope that they cannot really get dealing with the question at all. And yet in that bottle, of whatever size it may be, is the situation in which every man sitting on that Front Bench is bottled on this question. That applies to every party which has what is called numerical strength in this House, and no party can face the real question which is involved in the bottle, whatever size it may be, and therefore I transgress no further upon your time.

Mr. THURTLE: I rise as a mere Englishman to say I do not think it is in the best of taste for a Scottish Member to endeavour to persuade the House to deny to the English people a right which is already enjoyed by the Scottish people. I think if the Scottish nation may be entrusted to buy half bottles of spirits without any serious harm to the nation, the English nation ought to be allowed the same right.

Lieut.-Colonel JAMES: I ask leave to withdraw the Amendment.

Captain BENN: I would not have said a word, but I thought someone from these benches should in a sentence say this Amendment is intended to increase the facilities for drink. To that proposal we shall give our opposition.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Weekly wage-earner to be entitled to copy of return of payments made to him.)

Every weekly wage-earner whose employer has prepared and delivered to the assessor a return containing the payments made to that wage-earner shall be entitled to receive a copy of the return so prepared and delivered upon application to the employer, and the provisions of the Income Tax Acts with respect to the failure to deliver lists, declarations, and statements shall apply where the employer fails to accede to such application.—[Mr. Spencer.]

Brought up, and read the First time.

Mr. SPENCER: I beg to move, "That the Clause be read a Second time."
The Chancellor of the Exchequer cannot fortify himself in refusing this Clause by saying that any finance is involved in it. As the Clause is drawn, it will not mean one single farthing of loss or gain to the revenue. The object is to invest the workman with a certain right, and I fail to see on what ground he can
be denied that right. I do not think that any other section of Income Tax payers would tolerate for one moment having their Income Tax form filled up by some other party, and having no right of oversight of that form when it has been filled up. That applies to the manual worker wage earner at certain periods of the year. He may be called upon to give particulars as to his wife and children, but at other periods of the year when the quarterly return is sent from the employers to the Inland Revenue he is not asked what wages have been paid to him. A return is sent in and he receives a form demanding Income Tax if he has attained the Income Tax standard. If he has earned £135 a year as a single man he is called upon to pay Income Tax if in any quarter he has earned over one-fourth of that amount. He has no opportunity of correcting any errors, and it is because errors do arise that I am asking that the workman should be given the right to demand from the employer or the Inland Revenue a copy of the wages form sent in.
I have come across at least two cases where errors have been made. On one occasion I had to go to an office to inquire into the wages of a workman and the return which had been sent in, and I was informed that a return had been sent in which was purely guesswork, and that that was done to penalise the workman because he had failed to send in a weekly return of his own wages. That applies where a man is a contractor and he has certain men working under him. At the week-end he is supposed to send in a return of the wages paid out to the men working under him and of his own wage, and if he fails to send in that return, in some instances a certain amount is put down, whether right or wrong, and he is penalised in that way. Where you have a system of returns of that character and you have a contractor with certain men working under him and he sends in a return, he may put down what he likes. I do not say that he would deliberately do wrong, but there is room for error. He puts down the wages of the men working for him and he puts down his own wage in the returns to the colliery office, and the colliery office sends the return to the Inland Revenue. The workman has no knowledge what has been sent in, and he has no right to demand a copy of the
wages list sent to the Inland Revenue. Hon. Gentlemen opposite would not pay Income Tax on these lines. They would insist on knowing the amount of wages sent in and on being able, if they desired, to check the amount. The other case of which I know is that of a return of wages sent in by a colliery company which included, in the amount of wages, 11s. which had been paid each week for powder for blasting purposes. If hon. Gentlemen in carrying on a legitimate trade spent an amount of money in carrying it on that amount would not come into their income, and they would not allow the Inland Revenue to put it into their income. In this instance the man had no check on the Inland Revenue people, and it was only through the courtesy of the colliery company that I was able to ascertain that this amount had been included in the return of wages. I ask the Chancellor of the Exchequer to accept this modest Amendment which would simply invest a workman with the right to demand a return of his wages if he so desired.

Mr. MAXTON: I beg to second the Motion.
In the early hours of the other morning in Committee when we addressed the right hon. Gentleman on this matter, to move him to give it his serious consideration between then and the Report stage, I gathered from his benevolent expression that he was prepared to make some concession on this point. I hope that I was not wrong. I do not see the same benevolent look now.

Mr. CHURCHILL: I think that my concession took this form: When the matter was in Committee it seemed likely to be cut out from discussion, and I think I said that we would do what we could to see that it was discussed on Report.

Mr. MAXTON: I am sorry that I exaggerated the extent of the benevolence of the Chancellor, but it is not too late, and I hope that he will be persuaded to give the matter his very kindest consideration. It seems nothing to the Exchequer but it would get rid of an immense amount of friction with manual workers in various industries. I imagine that in big factories and workshops where there is a large number of employés, and there is a proper counting
house department, errors would very seldom creep in. But where you have a small employer of labour employing three or four people, whose bookkeeping is most haphazard, and in whose case the Income Tax Commissioners have the greatest difficulty in finding out what the employer's own income is, there may be errors. In these cases the Commissioners may have great doubts as to the accuracy of the return which the man makes with reference to his own income, and yet they accept unchallenged the return which he makes with reference to those employed by him. Seeing that this concession will cost nothing to the Revenue, but will give the workman the right to a check which at present every employer of labour enjoys I trust the Chancellor will accept the Amendment.

Mr. CHURCHILL: If there were any real hardship involved in the present administration of the law, at any rate it would not cost the Government any loss of revenue to set it right. The question therefore, to which I address myself is, whether there is any real hardship? I think it would be very objectionable for a man to have his Income Tax form made up and sent in by someone else, and to be simply assessed to pay without having any opportunity of knowing what had been said about his income or any opportunity of making a calculation or return for himself. When I first looked at the Amendment on the Paper I thought that that was the position of affairs. But let us see exactly what happens. Under the provisions of the Income Tax Acts, every employer is required to furnish returns of the salaries or wages paid to his employéey are over £150 a year. He sends in these returns. If at the same time he had to send a separate return to every individual in his employment, it would be a very great addition to the paper work and administrative labour thrown upon the employers, who by common consent are a very hard pressed community at the present time. The employers would have to send a duplicate form to each person in their employment.

Mr. SPENCER: Only on application.

Mr. CHURCHILL: The employer would have to be ready on application to send them. I am advised that if a workman wishes to know what return has
been made of his wages, there is no difficulty, in the overwhelming number of cases in obtaining the information.

Mr. SPENCER: On three occasions on behalf of workmen I applied to the Inland Revenue for a copy and they refused to give it to me.

Mr. CHURCHILL: I would like the hon. Member to give me instances, so that I may pursue them. I am assured that, quite apart from any application which the workman may make to his employer to know what has been said about his wages, when the Inland Revenue authorities send in their notice for the first quarter's payment, they set down on it the figures returned by the employer, as a general rule.

Mr. B. SMITH: Only the amount demanded.

Mr. CHURCHILL: The amount of wages a man has received and on which the assessment is based. If in any subsequent quarter the man wishes to know what the return is he would never be refused. Therefore, either from the employer in a reasonable way or from the Income Tax authorities, I am advised that the workmen can obtain information as to what return has been made by his employer. Quite apart from what the employer sends in, he makes his own return as to what his income is. The employer sends in the information and tells the Inland Revenue to whom they can apply, and then they apply and send in their assessment. But that does not prevent the workman from making out his own return, and if it is correctly made out he is in a perfectly secure and independent position in regard to it.
That is materially the law and how it works at the present time. It may be that there are cases where the employer has put a man down at a certain scale of wages, and the Inland Revenue have accepted the employers' word and the man has no knowledge of the matter and so forth, and I should like to have an instance of that kind brought to my notice. The last thing we wish to do is to have the grievances which are inseparable from the collection of taxes amplified by any want of fairness or propriety in the procedure. In discussing all these matters, it must be remembered how enormously we have reduced the taxation
upon this class of taxpayers. We have reduced it by more than half since 1921—not we alone, but this Government and its predecessors—and we have made the latest and the largest contribution in that direction. Therefore, I trust we will not be asked to insert this Amendment in the Finance Bill, because if my hon. Friend can give me cases where the Inland Revenue have refused to give information when it has been reasonably asked for in the ordinary course, I will gladly and with great care pursue these instances to their proper conclusion and see exactly how matters stand, and if dissatisfaction still exists on the subject, it will be quite open to hon. Members to bring it up next year with the knowledge produced by that inquiry.

Sir P. HASTINGS: I am sure the Chancellor is anxious that any grievance in this matter should be met. [HON. MEMBERS: "Speak up!"] I apologise to the House if I am not making myself heard. There does seem to be a grievance in this matter. I frankly confess I was not aware of it—and I fancy the Chancellor was not previously aware of it—until a number of cases were brought to my notice of this character. There is, of course, a limit to Income Tax above which a man who has a limited wage does not pay, and many of them do not know, until the conclusion of the period, whether they come within the limit or not. It is the duty of the man theoretically to send in his own return, and the return of the employer is theoretically, only a check on the return of the workman, but in point of fact a large proportion of workmen do not send the return, largely because they do not know until the end of the year whether they are liable for tax or not. Therefore in practice in most cases it is only the employer's return on which the Income Tax authorities can act. There are many cases in which discrepancies may arise. Cases frequently occur, I am told, in which a man is paid by the employer, but in turn he employs the assistance of boys and others and a proportion of the money received from the employer is paid out to someone else. The workman has no check upon this at all.

Mr. CHURCHILL indicated dissent.

Sir P. HASTINGS: My right hon. Friend will forgive me if I say that he has not, in fact, any check, because very often the workman simply receives from the employer a certain sum and has no record at all, and no idea that he is liable to tax but on the employer's showing at the end of the year he is liable to tax. I think it is not a very difficult matter to put right. In practice it is the fact that if a workman asks for an employer's return he does not get it, and it is right that he should not get it, in the full sense, but if my right hon. Friend were to give instructions that when the workman asks merely for that portion of the employer's return which affects himself, he should be entitled to it, I think all difficulty would be removed.

Mr. CHURCHILL: Who is he to ask—the employer or the Inland Revenue?

Sir P. HASTINGS: First the employer. If the employer says, "I have not got one; the only return is that sent in to the Inland Revenue,' then my right bon. Friend could give instructions, in those cases, that the Inland Revenue, instead of taking the point which they usually take, and rightly take—that there is no power in them to give the return of the employer to somebody else—are to say that the return, in so far as it affects the particular applicant, will be sent to him, the whole difficulty would be removed.

Mr. CHURCHILL: I am not going to make another speech. [HON. MEMBERS: "Speak up!"] I was going to raise my voice when I came to the operative part. I understand that the rule at present in force is that if the workman wishes to ascertain from the inspector of taxes what the employer says about his income of the previous quarter, or what is now the half-year, he is given that information. Further, I am advised, that in sending in the first assessment in the year the return of the wages paid, as sent in by the employer, is stated, and the assessment is normally based upon that. I will see that these processes are effectively operated in the next 12 months.

Sir P. HASTINGS: May I say—[HON. MEMBERS: "Speak up!"] May I say, now the right hon. Gentleman has given that information, I think it practically goes the whole way, or a portion of the way to remove the difficulty, and I think
we might now very well withdraw the Amendment.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Allowances in respect of contributions to superannuation fund.)

For the removal of doubts be it enacted that proviso (b) to Sub-section (1) of Section, thirty-two (which relates to exemption of superannuation funds from Income Tax) of the Finance Act, 1921, shall not apply in respect of any payments to a superannuation fund which is established under any local Act or any Order confirmed by or having the effect of an Act of Parliament for the superannuation of persons employed by local authorities.—[Mr. William Graham.]

Brought up, and read the First time.

Mr. W. GRAHAM: I beg to move, "That the Clause be read a Second time."
Superannuation schemes were established under certain rules of the Friendly Societies Act on the one hand and other superannuation schemes under Acts of Parliament. As hon. Members know, superannuation grew up in this country in a rather haphazard way, and some years ago local authorities adopted superannuation schemes under the Friendly Societies Act and later, particularly in 1922, other superannuation schemes for Local Government officers were adopted under an Act of Parliament.
Under the Finance Act of 1921 the contributions to a superannuation scheme are definitely excluded from Income Tax, but it so happens that, where schemes are registered under the old Friendly Societies Acts, they get only a partial abatement of Income Tax, whereas, if a scheme proceeds under the general Act of Parliament of, say, 1922, it gets the benefit of the full abatement. Whatever was the intention of the Clause regarding friendly societies, I am sure the House will agree that it was never intended to treat local government officers differently in this matter, because, after all, you are dealing here with exactly the same class of people, namely, local government officers employed by the local authorities in this country, and we find ourselves in this extraordinary position, that, because certain schemes happen to be registered under the Friendly Societies Acts, they get only a partial abatement for Income Tax purposes, whereas, if they are registered under the general Act of Parlia-
ment, they get a full abatement. That was never intended at all, and I am quite sure I have only to state the case to the Chancellor of the Exchequer to find a remedy to-night.
The other point is this: The House knows that very often, under a superannuation scheme, it is necessary for an employed person—and here again it is a local government officer in question—to pay in a lump sum contribution in respect of previous service. Now where he is making the ordinary annual contributions year by year he gets an abatement for Income Tax purposes, but if he pays in a lump sum in respect of prior service that is not treated as an ordinary annual contribution. Let me make it perfectly clear that I agree at once that it is not an ordinary annual contribution, but the strange position is this, that if an employed person was asked to pay a little higher rate for a year or two in respect of that prior service, that would be regarded as an ordinary annual contribution, and he would get the benefit of the Income Tax exemption. Now that state of affairs is, I think, altogether unexpected, and I would even say irregular. The whole object of the recommendations of the Royal Commission on Income Tax in 1919 was to give a definite encouragement—at all events, it was part of the intention—to the formation of these superannuation schemes. I hope that by the adoption of the Clause the right hon. Gentleman will do away with an anomaly which undoubtedly exists in the treatment of the Income Tax on these superannuation funds.

Mr. GEORGE THORNE: I do not desire to amplify what my right hon. Friend the Member for Central Edinburgh (Mr. Graham) has just stated, but having myself been for many years associated with local authorities, I have been brought very closely into contact with those whom they employ, who are referred to in this new Clause, and they, I know, as the House will recognise, render such effective service to the community that it would seem to be a special matter of regret if they felt themselves subject to any special injustice. My right hon. Friend has indicated what we regard as the injustice, and if it be an injustice, as I believe it is, I feel sure it will receive the favourable considera-
tion of the Government, and I hope they may be able to respond to my right hon. Friend.

11.0 P.M.

Mr. BANKS: I would very much like the right hon. Gentleman to apply His mind to a little doubt which the speech of the right hon. Member for Central Edinburgh (Mr. W. Graham) raised in my mind. The Clause refers, I apprehend, to the position of local government officers, and the right hon. Gentleman said that in some cases where a superannuation fund is operative it was necessary for some persons, to put themselves into benefit, to pay contributions in respect of a period already gone by, and if they paid a lump sum they could not get any abatement, but if the retrospective payments were spread over a period by annual contributions they did get an abatement. A little difficulty has arisen in my own constituency about a matter of this sort. In 1922 the Great Western Railway inaugurated a superannuation scheme, and in that year it was decided that the incomings and outgoings of railway servants had to be assessed on the actual incomings and outgoings of the year, and not of the three previous years. Those in the superannuation scheme, in order to put themselves into immediate benefit, had to pay contributions for 10 previous years and it was arranged that they should do so by an increased rate of annual payment for the succeeding four years. They put down that annual payment as an allowance in their return, and for two years the Income Tax authorities allowed it, but now they have all received notice that the Income Tax authorities have made a mistake, that it was not an ordinary annual contribution, but in the nature of lump sum retrospectively for a previous period, and they are asked to return very substantial sums to rectify the error.
I only put that case because I think it is to some extent connected with the Amendment. It raises a little difficulty which seems, on the face of it, to constitute a discrimination, and if the right hon. Gentleman would make some suggestion on that point I should be very much obliged, as it certainly affects several
thousand persons employed on the Great Western Railway in my own constituency.

Mr. CHURCHILL: These are matters of considerable complexity. In the first place, we are dealing, admittedly, with a somewhat anomalous and exceptional state of the law. In the second place, we are dealing with two Amendments at once. Dealing with the first of the two Amendments, an exception for the purpose of Income Tax has been made in the case of the superannuation funds which are registered friendly societies and certain other forms of superannuation funds. In this case, the employé receives an allowance for his contribution, not under the head of expenses, but under the head of life insurance allowance, and it is out of that working of the law which has grown up step by step, precedent on precedent, that the anomalous situation dealt with in the first Amendment of my right hon. Friend arises. He proposes a certain remedy, but I am advised that the result of that remedy would be to create a worse anomaly than the one he seeks to relieve. The technical rule governing life insurance allowance would come into play, and, if this Amendment were accepted, I am told that the small employés of local authorities might find their charge for Income Tax increased by a few shillings, while the liability in the case of a comparatively small number of highly paid employés would be reduced. I understood there are several thousands of employés of the Great Western Railway concerned. That is a point that has substance and reality. I understood that an employé contributing to a superannuation fund receives an allowance on his Income Tax assessment on account of his contribution. Usually, it is made under the head of expenses. The exemption of the people who come in later or at irregular times, and who pay a large sum in order to place themselves in proper relation to the fund is the difficulty, and the request, as I understand it, is that these people who pay the lump sum should be given the benefit of the immunity asked for.

Mr. BANKS: Where a superannuation fund is in existence and a person comes into it late and pays a lump sum, it is only reasonable that he should be so regarded, but the difficulty I mentioned was the case of a superannuation fund
started in 1922, and where I believe everybody practically paid a larger sum in order to put themselves immediately into benefit?

Mr. CHURCHILL: We have not yet been able to devise a system to give exemption in the case of the lump sum payment contributed on behalf of the belated adherents to the scheme. The difficulty of doing it has prevented us from doing it. There is the difficulty of paying the benefit on account of these lump sum contributions. We have not been able up to the present to devise a scheme without a great addition to the labours and complications of the case. If one found that this case really rises to large proportions and becomes a serious grievance, the matter would have to be studied in greater detail, and the extra labour which seems to attach to the calculations would have to be made. I am quite ready in any future Budget that I may have to put forward to go into the matter in detail. The Treasury view is that these lump sum contributions in respect of past years, and paid to secure any further annuity, cannot be exempted, and if you were to open out that question of exempting from Income Tax these capital payments, you would have to frame your legislation in regard to many other points than those put forward.

Mr. GRAHAM: May I ask the Chancellor one question? If he is unable to meet us as regards lump-sum payments, cannot he at all events accept the first

Amendment, which merely puts local government officers in this country on a uniform basis whether they are under a friendly societies' superannuation scheme, so to speak, or under a superannuation scheme under the general Act of Parliament? I do not dispute that it makes little difference. Local government officers recognise that, but there is no reason in the world why you should have a different rate of allowance in what is really, in fundamentals, a common superannuation scheme. I do press the Chancellor of the Exchequer at least to give way on that point, because I think he himself recognises that that is a perfectly sound case.

Mr. CHURCHILL: I only speak again with the permission of the House, and only for a moment. I am advised that the consequence of adopting the remedies proposed would be to create much greater anomalies than that which it is sought to remedy, and that the advantage you give to a comparatively small number of rather highly-paid officials would be balanced by a disadvantage, admittedly of only a few shillings a year, to a much larger number of smaller subordinates of the local authorities. Though I would like to go into the matter in detail with the hon. Gentleman in the months that lie before us, while I feel as at present I should greatly hesitate to adopt the suggestion.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 129; Noes, 272.

Division No. 200.]
AYES.
[11.12 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Crawfurd, H. E.
Hayday, Arthur


Adamson, W. M. (Staff., Cannock)
Dalton, Hugh
Hayes, John Henry


Alexander, A. V. (Sheffield, Hillsbro')
Day, Colonel Harry
Henderson, Rt. Hon. A. (Burnley)


Ammon, Charles George
Dennison, R.
Henderson, T. (Glasgow)


Attlee, Clement Richard
Duncan, C.
Hirst, G. H.


Baker, J. (Wolverhampton, Bilston)
Dunnico, H.
Hirst, W. (Bradford, South)


Barker, G. (Monmouth, Abertillery)
Edwards, John H. (Accrington)
Hore-Belisha, Leslie


Barnes, A.
Forrest, W.
Hudson, J. H. (Huddersfield)


Barr, J.
Garro-Jones, Captain G. M.
Jenkins, W. (Glamorgan, Neath)


Batey, Joseph
Gillett, George M.
John, William (Rhondda, West)


Benn, Captain Wedgwood (Leith)
Gosling, Harry
Johnston, Thomas (Dundee)


Bentinck, Lord Henry Cavendish-
Graham, D. M. (Lanark, Hamilton)
Jones, Henry Haydn (Merioneth)


Bowerman, Rt. Hon. Charles W.
Graham, Rt. Hon. Wm. (Edin., Cent.)
Jones, Morgan (Caerphilly)


Broad, F. A.
Greenall, T.
Jones, T. I. Mardy (Pontypridd)


Bromley, J.
Grenfell, D. R. (Glamorgan)
Kelly, W. T.


Charleton, H. C.
Griffiths, T. (Monmouth, Pontypool)
Kennedy, T.


Clowes, S.
Groves, T.
Lansbury, George


Cluse W. S.
Grundy, T. W.
Lawson, John James


Clynes, Rt. Hon. John R.
Guest, J. (York, Hemsworth)
Lowth, T.


Collins Sir Godfrey (Greenock)
Guest, Dr. L. Haden (Southwark, N.)
Lunn, William


Compton, Joseph
Hall, F. (York, W.R., Normanton)
Mackinder, W.


Connolly, M.
Hall, G. H. (Merthyr Tydvil)
MacLaren, Andrew


Cove, W. G.
Hamilton, Sir R. (Orkney & Shetland)
Maclean, Neil (Glasgow, Govan)


Cowan, D. M. (Scottish Universities)
Hardie, George D.
March, S.


Maxton, James
Rose, Frank H.
Trevelyan, Rt. Hon. C. P.


Mitchell, E. Rosslyn (Paisley)
Saklatvala, Shapurji
Varley, Frank B.


Montague, Frederick
Scrymgeour, E.
Viant, S. P.


Morris, R. H.
Shaw, Rt. Hon. Thomas (Preston)
Walsh, Rt. Hon. Stephen


Morrison, R. C. (Tottenham, N.)
Short, Alfred (Wednesbury)
Watson, W. M. (Dunfermline)


Murnin, H.
Slesser, Sir Henry H.
Watts-Morgan, Lt.-Col. D. (Rhondda)


Naylor, T. E.
Smillie, Robert
Webb, Rt. Hon. Sidney


Oliver, George Harold
Smith, Ben (Bermondsey, Rotherhithe)
West wood, J.


Palin, John Henry
Smith, Rennie (Penistone)
Wheatley, Rt. Hon. J.


Paling, W.
Snell, Harry
Whiteley, W.


Parkinson, John Allen (Wigan)
Snowden, Rt. Hon. Philip
Wilkinson, Ellen C.


Pethick-Lawrence, F. W.
Spencer, G. A. (Broxtowe)
Williams, David (Swansea, East)


Ponsonby, Arthur
Stamford, T. W.
Williams, T. (York, Don Valley)


Potts, John S.
Stephen, Campbell
Wilson, R. J. (Jarrow)


Rees, Sir Beddoe
Sutton, J. E.
Windsor, Walter


Richardson, R. (Houghton-le-Spring)
Taylor, R. A.
Wright, W.


Riley, Ben
Thomas, Rt. Hon. James H. (Derby)
Young, Robert (Lancaster, Newton)


Roberts, Rt. Hon. F. O. (W. Bromwich)
Thomson, Trevelyan (Middlesbro. W.)



Robertson, J. (Lanark, Bothwell)
Thurtle, E.
TELLERS FOR THE AYES.—


Robinson, W. C. (Yorks, W. R., Elland)
Tinker, John Joseph
Mr. Charles Edwards and Mr.




George Thorne.


NOES.


Acland-Troyte, Lieut.-Colonel
Crooke, J. Smedley (Deritend)
Hohler, Sir Gerald Fitzroy


Agg-Gardner, Rt. Hon. Sir James T.
Brookshank, Cpt. H. (Lindsey, Gainsbro)
Holbrook, Sir Arthur Richard


Albery, Irving James
Crookshank, Col. H. (Lindsey, Gainsbro)
Homan, C. W. J.


Amery, Rt. Hon. Leopold C. M. S.
Curzon, Captain Viscount
Hopkins, J. W. W.


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Dalkeith, Earl of
Horlick, Lieut.-Colonel J. N.


Ashmead-Bartlett, E.
Davidson, J. (Hertf'd, Hemel Hempst'd)
Howard, Capt. Hon. D. (Cumb., N.)


Astor, Viscountess
Davidson, Major-General Sir John H.
Hudson, Capt. A. U. M. (Hackney, N)


Atholl, Duchess of
Davies, Maj. Geo. F. (Somerset, Yeovil)
Hudson, R. S. (Cumberl'nd, Whiteh'n)


Baldwin, Rt. Hon. Stanley
Dawson, Sir Philip
Hume, Sir G. H.


Balfour, George (Hampstead)
Dean, Arthur Wellesley
Iliffe, Sir Edward M.


Balniel, Lord
Dixon, Captain Rt. Hon. Herbert
Inskip, Sir Thomas Walker H.


Barclay-Harvey, C. M.
Doyle, Sir N. Grattan
Jackson, Lieut.-Colonel Hon. F. S.


Barnett, Major Richard
Drewe, C.
Jackson, Sir H. (Wandsworth, Cen'l)


Bennett, A. J.
Eden, Captain Anthony
Jacob, A. E.


Bethell, A.
Edmondson, Major A. J.
James. Lieut.-Colonel Hon. Cuthbert


Betterton, Henry B.
Elliot, Captain Walter E.
Jephcott, A. R.


Bird, E. R. (Yorks, W. R., Skipton)
Elvedon, Viscount
Joynson-Hicks, Rt. Hon. Sir William


Blades, Sir George Rowland
England, Colonel A.
Kennedy, A. R. (Preston).


Blundell, F. N.
Erskine, Lord (Somerset, Weston-s.-M.)
Kidd, J. (Linlithgow)


Boothby, R. J. G.
Everard, W. Lindsay
Kindersley, Major G. M.


Bourne, Captain Robert Croft
Fairfax, Captain J. G.
King, Captain Henry Douglas


Bowater, Sir T. Vansittart
Falle, Sir Bertram G.
Kinloch-Cooke, Sir Clement


Bowyer, Capt. G. E. W.
Fielden, E. B.
Knox, Sir Alfred


Boyd-Carpenter, Major A.
Finburgh, S.
Lamb, J. Q.


Bridgeman, Rt. Hon. William Clive
Fleming, D. P.
Lane-Fox, Lieut.-Col. George R.


Briscoe, Richard George
Ford, P. J.
Leigh, Sir John (Clapham)


Brittain, Sir Harry
Forestier-Walker, Sir L.
Lister, Cunliffe-, Rt. Hon. Sir Philip


Brocklebank, C. E. R.
Foxcroft, Captain C. T.
Little, Dr. E. Graham


Brooke, Brigadier-General C. R. I.
Framantle, Lieut.-Colonel Francis E.
Locker-Lampson, G. (Wood Green)


Broun-Lindsay, Major H.
Gadie, Lieut.-Col. Anthony
Locker-Lampson, Com. O.(Handsw'th)


Brown, Brig.-Gen. H.C.(Berks, Newb'y)
Ganzonl. Sir John
Loder, J. de V.


Bullock, Captain M.
Gates, Percy
Looker, Herbert William


Burman, J. B.
Goff, Sir Park
Lougher, L.


Burney, Lieut.-Com. Charles D.
Gower, Sir Robert
Luce, Maj.-Gen. Sir Richard Harman


Burton, Colonel H. W.
Grant, J. A.
MacAndrew, Charles Glen


Butler, Sir Geoffrey
Greene, W. P. Crawford
Macdonald, Capt. P. D. (I. of W.)


Cadogan, Major Hon. Edward
Gretton, Colonel John
McDonnell, Colonel Hon. Angus


Campbell, E. T.
Grotrian, H. Brent
Macintyre, I.


Cayzer, Sir C. (Chester, City)
Guest, Capt. Rt. Hon. F. E. (Bristol, N.)
McLean, Major A.


Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)
Guinness, Rt. Hon. Walter E.
MacMillan, Captain H.


Cazalet, Captain Victor A.
Gunston, Captain D. W.
Maitland, Sir Arthur D. Steel-


Cecil, Rt. Hon. Sir Evelyn (Aston)
Hacking, Captain Douglas H.
Makins, Brigadier-General E.


Cecil, Rt. Hon. Lord H. (Ox. Univ.)
Hall. Lieut.-Col. Sir F. (Dulwich)
Malone, Major P. B.


Chadwick, Sir Robert Burton
Hall, Capt. W. D'A. (Brecon & Rad.)
Manningham-Buller, Sir Mervyn


Chamberlain, Rt. Hn. J. A. (Birm., W.)
Hammersley, S. S.
Margesson, Captain D.


Charteris, Brigadier-General J.
Hannon, Patrick Joseph Henry
Marriott, Sir J. A. R.


Christie, J. A.
Harland, A.
Meyer, Sir Frank


Churchill, Rt. Hon. Winston Spencer
Harrison, G. J. C.
Milne, J. S. Wardlaw-


Churchman, Sir Arthur C.
Harvey, G. (Lambeth, Kennington)
Mitchell, Sir W. Lane (Streatham)


Clarry, Reginald George
Harvey, Major S. E. (Devon, Totnes)
Monsell, Eyres, Com. Rt. Hon. B. M.


Cobb, Sir Cyril
Haslam, Henry C.
Moore, Lieut.-Colonel T. C. R. (Ayr)


Cockerill, Brigadier-General G. K.
Hawke, John Anthony
Moore, Sir Newton J.


Colfox, Major Wm. Phillips
Henderson, Capt. R.R. (Oxf'd, Henley)
Moore-Brabazon, Lieut.-Col. J. T. C.


Cooper, A. Duff
Henderson, Lieut.-Col. V. L. (Bootle)
Morden, Colonel Walter Grant


Cope, Major William
Heneage, Lieut.-Col. Arthur P.
Morrison, H. (Wilts, Salisbury)


Courtauld, Major J. S.
Henn, Sir Sydney H.
Morrison-Bell, Sir Arthur Clive


Cowan, Sir Wm. Henry (Islington, N.)
Hennessy, Major J. R. G.
Nail, Lieut.-Colonel Sir Joseph


Craik, Rt. Hon. Sir Henry
Henniker-Hughan, Vice-Adm. Sir A.
Nelson, Sir Frank


Croft, Brigadier-General Sir H.
Herbert, S. (York, N. R., Scar. & Wh'by)
Newman, Sir R. H. S. D. L. (Exeter)


Crook, C. W.
Hogg, Rt. Hon. Sir D.(St. Marylebone)
Newton, Sir D. G. C. (Cambridge)




Nicholson, O. (Westminster)
Samuel, A. M. (Surrey, Farnham)
Thomson, Sir W. Mitchell- (Croydon, S.)


Nicholson, Col. Rt. Hn. W. G.(Ptrsf'ld.)
Samuel, Samuel (W'dsworth, Putney)
Titchfield, Major the Marquess of


Nuttall, Ellis
Sanders, Sir Robert A.
Tryon, Rt. Hon. George Clement


Oakley, T.
Sanderson, Sir Frank
Vaughan-Morgan, Col. K. P.


O'Connor, T. J. (Bedford, Luton)
Sassoon, Sir Philip Albert Gustave D.
Waddington, R.


O'Neill, Major Rt. Hon. Hugh
Savery, S. S.
Wallace, Captain D. E.


Oman, Sir Charles William C.
Shaw, R. G. (Yorks, W.R., Sowerby)
Ward, Lt.-Col. A. L. (Kingston-on-Hull)


Ormsby-Gore, Hon. William
Shaw, Lt.-Col. A. D. Mcl.(Renfrew, W)
Warner, Brigadier-General W. W.


Pennefather, Sir John
Shaw, Capt. W. W. (Wilts, Westb'y)
Warrender, Sir Victor


Penny, Frederick George
Sheffield, Sir Berkeley
Waterhouse, Captain Charles


Percy, Lord Eustace (Hastings)
Shepperson, E. W.
Watson, Sir F. (Pudsey and Otley)


Perring, William George
Simms, Dr. John M. (Co. Down)
Wells, S. R.


Peto, Basil E. (Devon, Barnstaple)
Skelton, A. N.
Wheler, Lieut.-Col. Granville C. H.


Power, Sir John Cecil
Slaney, Major P. Kenyon
White, Lieut.-Colonel G. Dairymple


Preston, William
Smith, R. W. (Aberd'n & Kinc'dine, C.)
Williams, Com. C. (Devon, Torquay)


Price, Major C. W. M.
Smith-Carington, Neville W.
Williams, Herbert G. (Reading)


Raine, W.
Smithers, Waldron
Wilson, Sir C. H. (Leeds, Central)


Rawlinson, Rt. Hon. John Fredk. Peel
Spender Clay, Colonel H.
Windsor-Clive, Lieut.-Colonel George


Reid, Capt. A. S. C. (Warrington)
Stanley, Col. Hon. G.F. (Will'sden, E.)
Winterton, Rt. Hon. Earl


Reid, D. D. (County Down)
Stanley, Lord (Fylde)
Wise, Sir Fredric


Remer, J. R.
Stanley, Hon. O. F. G. (Westm'eland)
Wolmer, Viscount


Remnant, Sir James
Steel, Major Samuel Strang
Womersley, W. J.


Rentoul, G. S.
Storry Deans, R.
Wood, B. C. (Somerset, Bridgwater)


Rhys, Hon. C. A. U.
Stott, Lieut.-Colonel W. H.
Wood, E. (Chest'r Stalyb'dge & Hyde)


Rice, Sir Frederick
Strickland, Sir Gerald
Wood, Sir Kingsley (Woolwich, W.)


Richardson, Sir p. W. (Sur'y, Ch'ts'y)
Stuart, Hon. J. (Moray and Nairn)
Woodcock, Colonel H. C.


Roberts, Samuel (Hereford, Hereford)
Sueter, Rear-Admiral Murray Fraser
Worthington-Evans, Rt. Hon. Sir L.


Ropner, Major L.
Sugden, Sir Wilfrid
Young, E. Hilton (Norwich)


Ruggles-Brise, Major E. A.
Sykes, Major-Gen. Sir Frederick H.



Russell, Alexander West- (Tynemouth)
Templeton, W. P.
TELLERS FOR THE NOES.—


Rye, F. G.
Thompson, Luke (Sunderland)
Colonel Gibbs and Major Sir Harry


Salmon, Major I.
Thomson, F. C. (Aberdeen, South)
Barnston.

NEW CLAUSE.—(Table water duties of excise.)

As from the first day of August, nineteen hundred and twenty-five, the definition of table waters in Section four of The Finance (New Duties) Act, 1916, shall be amended so as to exclude from table waters chargeable with duties of excise plain spring water which is not either naturally or artificially aerated and which has not undergone any process of manufacture and which is the product of the British Empire.—[Mr. Basil Peto.]

Brought up, and read the First time.

Mr. BASIL PETO: I beg to move, "That the Clause be read a Second time."
I shall endeavour to limit my remarks on this Clause to the utmost brevity, in consonance with the nature of the Clause and the smallness of the matter with which it deals. Since I moved this Clause in 1923 a good deal has happened. The Clause asks the House to exempt from the duty of 8d. per gallon plain spring water that happens to be put in a bottle. Last year, when another Government was in power, all sweetened table waters were exempted from the duty. The kiddies' "ginger pop," of which our old friend Will Crooks—I think he was the old friend of every Member on this side of the House—often spoke, and the exemption of which from taxation he always advocated, is no longer taxed; the duty
on herb beer has been removed; and in 1923 the duty of 8d. per gallon on cider was removed. Still, however, if plain spring water is placed in a bottle, it is charged with an excise duty of 8d. per gallon. This duty was increased to 8d. as a War Measure, and it has never been removed. The duty on unsweetened aerated water, of course, has its only justification in the fact that soda-water is the friend, I might say the intimate associate, of that shocking fellow whisky, and it distresses me that plain spring water, because it is put into a bottle, should be brought into such bad company. The main argument for exempting it is this. Of course, whereas soda water is associated with whisky, this plain spring water is a medical necessity to people who suffer from rheumatism and find themselves compelled to live in a district where there is a chalky sub-soil. The doctor will tell them they must have plain pure spring water uncontaminated with chalk, which is poison to their system. It is absurd to charge Excise duty upon such an article. You might almost as well charge a tax upon pure air or sunshine. The thing is injustifiable. This concession was practically granted in 1923—as nearly so as any words from the Front Bench that do not constitute a categorical promise could promise anything.

Lieut. - Colonel WATTS- MORGAN: Which side?

Mr. PETO: Our side. The present Home Secretary, who was the Financial Secretary to the Treasury said:
Inasmuch as the acceptance of this proposal would only mean a loss of revenue altogether infinitesimal, and as I have offered to consider the position of certain similar duties, I will promise my hon. Friend, if he will withdraw his Amendment, that it shall have favourable consideration before the Report stage, and, indeed, I hope it will be possible to make the concession for which he has asked.
I have since that still further limited this request, which in 1923 involved an infinitesimal sacrifice of revenue, to pure spring water which is the product of the British Empire and is bottled here. I do not ask to include any foreign fancy production which might be regarded as a luxury of the rich. I ask that pure British spring water bottled in this country should not be charged the duty of 8d. a gallon.

Viscountess ASTOR: As the case has been so ably put and the hour is late, I shall simply say I should like to second the Motion.

Mr. CHURCHILL: It is with no feeling of animosity towards water that I regret

I am unable to accept this Clause. I am really not looking at the question from the point of view of beverages but from the point of view of luxuries, and I must say that, apart from medicinal purposes, which are covered by existing Finance Acts, it is a very luxurious thing for people to have only natural water specially put into bottles and served to them in this exceptional manner. Everyone knows perfectly well that ordinary London water is extremely good to drink in hot weather. If people exercise their undoubted right to have perfect water specially bottled and conveyed to a distance inland instead of this excellent London water or other admirable local water, it behoves the State to support temperance on every occasion, and teetotalism is worthy of the greatest respect, but this is a form of luxury teetotalism for the sake of which I really do not think we ought to undergo a substantial sacrifice of essential revenue.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 111; Noes, 248.

Division No. 201.]
AYES.
[11.30 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Henderson, Rt. Hon. A. (Burnley)
Robertson. J. (Lanark, Bothwell)


Adamson, W. M. (Staff., Cannock)
Henderson, T. (Glasgow)
Robinson, W. C. (Yorks, W. R., Elland)


Alexander, A. V. (Sheffield, Hillsbro')
Hirst, G. H.
Rose, Frank H.


Ammon, Charles George
Hirst, W. (Bradford, South)
Scrymgeour, E.


Barnes, A.
Hudson, J. H. (Huddersfield)
Shaw, Rt. Hon. Thomas (Preston)


Barr, J.
Jenkins, W. (Glamorgan, Neath)
Slesser, Sir Henry H.


Batey, Joseph
John, William (Rhondda, West)
Smith, Ben (Bermondsey, Rotherhithe)


Benn, Captain Wedgwood (Leith)
Johnston, Thomas (Dundee)
Sneil, Harry


Broad, F. A.
Jones, Henry Haydn (Merioneth)
Snowden, Rt. Hon. Philip


Bromley, J.
Jones, Morgan (Caerphilly)
Spencer, G. A. (Broxtowe)


Charleton, H. C.
Jones, T. I. Mardy (Pontypridd)
Stamford, T. W.


Clowes, S.
Kelly, W. T.
Stephen, Campbell


Cluse, W. S.
Kennedy, T.
Sutton, J. E.


Clynes, Rt. Hon. John R.
Lansbury, George
Taylor, R. A.


Collins, Sir Godfrey (Greenock)
Lawson, John James
Thomson, Trevelyan (Middlesbro, W.)


Compton, Joseph
Lowth, T.
Thorne, G. R. (Wolverhampton, E.)


Connolly, M.
Lunn, William
Thurtle, E.


Cowan. D. M. (Scottish Universities)
Mackinder, W.
Tinker, John Joseph


Crawturd, H. E.
MacLaren, Andrew
Trevelyan, Rt. Hon. C. P.


Dalton, Hugh
Maclean, Neil (Glasgow, Govan)
Varley, Frank B.


Day, Colonel Harry
March, S.
Viant, S. P.


Duncan, C.
Maxton, James
Walsh, Rt. Hon. Stephen


Dunnico, H.
Mitchell, E. Rosslyn (Paisley)
Watson, W. M. (Dunfermline)


Edwards, C. (Monmouth, Bedwellty)
Montague, Frederick
Watts-Morgan, Lt.-Col. D. (Rhondda)


Forrest, W.
Morris, R. H.
Webb, Rt. Hon. Sidney


Gillett, George M.
Murnin, H.
Westwood, J.


Graham, D. M. (Lanark, Hamilton)
Naylor, T. E.
Whiteley, W.


Graham. Rt. Hon. Wm. (Edin., Cent.)
Oliver, George Harold
Wilkinson, Ellen C.


Greenall, T.
Palin, John Henry
Williams, David (Swansea, East)


Grenfell, D. R. (Glamorgan)
Paling, W.
Williams, T. (York, Don Valley)


Groves, T.
Parkinson, John Allen (Wigan)
Wilson, R. J. (Jarrow)


Grundy, T. W.
Pethick-Lawrence, F. W.
Windsor, waiter


Guest, J. (York, Hemsworth)
Ponsonby, Arthur
Wright, W.


Hall, F. (York, W. R., Normanton)
Potts, John S.
Young, Robert (Lancaster, Newton)


Hall, G. H. (Merthyr Tydvil)
Rees, Sir Beddoe



Hamilton, Sir R. (Orkney & Shetland)
Richardson, R. (Houghton-le-Spring)
TELLERS FOR THE AYES.—


Hardie, George D.
Riley, Ben
Mr. Basil Peto and Viscountess


Mayday, Arthur
Roberts, Rt. Hon. F. O. (W. Bromwich)
Astor.


Hayes, John Henry




NOES.


Acland-Troyte, Lieut.-Colonel
Fremantle, Lieut.-Colonel Francis E.
Oman, Sir Charles William C.


Agg-Gardner, Rt. Hon. Sir James T.
Gadie, Lieut.-Col. Anthony
Orsmby-Gore, Hon. William


Albery, Irving James
Ganzoni, Sir John
Pennefather, Sir John


Amery, Rt. Hon. Leopold C. M.S.
Gates, Percy
Penny, Frederick George


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Gower, sir Robert
Percy, Lord Eustace (Hastings)


Ashmead-Bartiett, E.
Grant, J. A.
Pownall, Lieut.-Colonel Assheton


Atholl, Duchess of
Greene, W. P. Crawford
Preston, William


Baldwin, Rt. Hon. Stanley
Guest, Capt. Rt. Hon. F.E. (Bristrol, N.)
Price, Major C. W. M.


Balfour, George (Hampstead)
Guinness, Rt. Hon. Walter E.
Raine, W.


Balniel, Lord
Gunston, Captain D. W.
Reid, Capt. A. S. C. (Warrington)


Banks, Reginald Mitchell
Hall, Lieut.-Cot. Sir F. (Dulwich)
Reid, D. D. (County Down)


Barclay-Harvey, C. M.
Hall, Capt. W. D'A. (Brecon & Rad.)
Remer, J. R.


Barnett, Major Sir Richard
Hammersley, S. S.
Remnant, Sir James


Barnston, Major Sir Harry
Hannon, Patrick Joseph Henry
Rentoul, G. S.


Bennett, A. J.
Harland, A.
Rhys, Hon. C. A. U.


Bentinck, Lord Henry Cavendish-
Harrison, G. J. C.
Rice, Sir Frederick


Bethell, A.
Harvey, G. (Lambeth, Kennington)
Richardson, Sir P. W. (Sur'y, Ch'ts'y)


Betterton, Henry B.
Harvey, Major S. E. (Devon, Totnes)
Roberts, Samuel (Hereford, Hereford)


Bird, E. R. (Yorks, W. R., Skipton)
Haslam, Henry C.
Ropner, Major L.


Blades, Sir George Rowland
Henderson, Capt. R. R. (Oxf'd, Henley)
Ruggles-Brise, Major E. A.


Blundell, F. N.
Henderson, Lieut.-Col. V. L. (Bootle)
Russell, Alexander West (Tynemouth)


Boothby, R. J. G.
Heneage, Lieut.-Col. Arthur P.
Rye, F. G.


Bourne, Captain Robert Croft
Henn, Sir Sydney H.
Salmon, Major I.


Bowater, Sir T. Vansittart
Hennessy, Major J. R. G.
Samuel, A. M. (Surrey, Farnham)


Bowerman, Rt. Hon. Charles W.
Henniker-Hughan, Vice-Adm. Sir A.
Samuel, Samuel (W'dsworth, Putney)


Bowyer, Capt. G. E. W
Herbert, S. (York, N.R-,Scar. & Wh'by)
Sanders, Sir Robert A.


Bridgman, Rt. Hon. William Clive
Hogg, Rt. Hon. Sir D.(St. Marylebone)
Sanderson, Sir Frank


Briscoe, Richard George
Holbrook, Sir Arthur Richard
Savery, S. S.


Brittain, Sir Harry
Homan, C. W. J.
Shaw, Lt.-Col. A. D. Mcl. (Renfrew, W)


Brocklebank, C. E. R.
Hopkins, J. W. W.
Shaw, R. G. (Yorks, W. R., Sowerby)


Brooke, Brigadier-General C. R. I.
Hore-Belisha, Leslie
Shaw, Capt. W. W. (Wilts, Westb'y)


Broun-Lindsay, Major H.
Howard, Capt. Hon. D. (Cumb., N.)
Sheffield, Sir Berkeley


Brown, Brig.-Gen. H.C.(Berks, Newb'y)
Hudson, Capt. A. U. M. (Hackney, N.)
Shepperson, E. W.


Bullock, Captain M.
Hudson, R. S. (Cumberl'nd, Whiteh'n)
Simms, Dr. John M. (Co. Down)


Burman, J. B.
Hume, Sir G. H.
Skelton, A. N.


Burney, Lieut.-Com. Charles D.
Iliffe, Sir Edward M.
Slaney, Major P. Kenyon


Burton, Colonel H. W.
Inskip, Sir Thomas Walker H.
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Butler, Sir Geoffrey
Jackson, Lieut.-Colonel Hon. F. S.
Smith-Carington, Neville W.


Cadogan, Major Hon. Edward
Jackson, Sir H. (Wandsworth, Cen'l)
Smithers, Waldron


Campbell, E. T.
Jacob, A. E.
Spender Clay, Colonel H.


Cayzer, Sir C. (Chester, City)
Jephcott, A. R.
Stanley, Lord (Fylde)


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Joynson-Hicks, Rt. Hon. Sir William
Stanley, Col. Hon. G. F. (Will'sden, E.)


Cazalet, Captain Victor A.
Kennedy, A. R. (Preston).
Stanley, Hon. O. F. G. (Westm'eland)


Cecil, Rt. Hon. Sir Evelyn (Aston)
Kidd, J. (Linlithgow)
Steel, Major Samuel Strang


Chadwick, Sir Robert Burton
Kindersley, Major Guy M.
Storry Deans, R.


Charteris, Brigadier-General J.
King, Captain Henry Douglas
Stott, Lieut.-Colonel W. H.


Christie, J. A.
Knox, Sir Alfred
Strickland, Sir Gerald


Churchill, Rt. Hon. Winston Spencer
Lamb, J. Q.
Stuart, Hon. J. (Moray and Nairn)


Churchman, Sir Arthur C.
Lane-Fox, Lieut.-Col. George R.
Sueter, Rear-Admiral Murray Fraser


Clarry, Reginald George
Leigh, Sir John (Clapham)
Sugden, Sir Wilfrid


Cobb, Sir Cyril
Lister, Cunliffe-, Rt. Hon. Sir Philip
Sykes, Major-Gen. Sir Frederick H.


Cockerill, Brigadier-General G. K.
Little, Dr. E. Graham
Templeton, W. P.


Colfox, Major Wm. Phillips
Locker-Lampson, Com. O. (Handsw'th)
Thompson, Luxe (Sunderland)


Cooper, A. Duff
Looker, Herbert William
Thomson, F. C. (Aberdeen, South)


Cope, Major William
Lougher, L.
Thomson, Sir W. Mitchell-(Croydon, S.)


Courtauld, Major J. S.
Luce, Maj.-Gen. Sir Richard Harman
Titchfield, Major the Marquess of


Craik, Rt. Hon. Sir Henry
MacAndrew, Charles Glen
Tryon, Rt. Hon. George Clement


Croft, Brigadier-General Sir H.
Macdonald, Capt. P. D. (I. of W.)
Vaughan-Morgan, Col. K. P


Crooke, J. Smedley (Deritend)
McDonnell, Colonel Hon. Angus
Waddington, R.


Crookshank, Col. C. de W. (Berwick)
Macintyre, I.
Wallace, Captain D. E.


Crookshank, Cpt. H. (Lindsey, Gainsbro)
Maitland, Sir Arthur D. Steel-
Ward, Lt.-Col. A. L. (Kingston-on-Hull)


Curzon, Captain Viscount
McLean, Major A.
Warner, Brigadier-General W. W.


Dalkeith, Earl of
MacMillan, Captain H.
Warrender, Sir Victor


Davidson, J. (Hertf'd, Hemel Hempst'd)
Makins, Srigadler-General E.
Waterhouse, Captain Charles


Davidson, Major-General Sir John H.
Malone, Major P. B.
Watson, Sir F. (Pudsey and Otley)


Davies, Maj. Geo. F. (Somerset, Yeovil)
Manningham-Buller, Sir Mervyn
Wells, S. R.


Dawson, Sir Philip
Margesson, Captain D.
Wheler, Major Sir Granville C. H.


Dean, Arthur Wellesley
Marriott, Sir J. A. R.
White, Lieut.-Colonel G. Dairymple


Dixon, Captain Rt. Hon. Herbert
Milne. J. S. Wardlaw-
Williams, Com. C. (Devon, Torquay)


Drewe, C.
Moles, Thomas
Williams, Herbert G. (Reading)


Eden, Captain Anthony
Monsell, Eyres, Com. Rt. Hon. B. M.
Wilson, Sir C. H. (Leeds, Central)


Edmondson, Major A. J.
Moore, Sir Newton J.
Windsor-Clive, Lieut.-Colonel George


Elliot, Captain Walter E.
Moore, Lieut.-Colonel T. C. R. (Ayr)
Winterton, Rt. Hon. Earl


Elveden, Viscount
Moore-Brabazon, Lieut.-Col. J. T. C.
Wise, Sir Fredric


England, Colonel A.
Morden, Colonel Walter Grant
Wolmer, Viscount


Everard, W. Lindsay
Morrison-Bell, Sir Arthur Clive
Womersley, W. J.


Fairfax, Captain J. G.
Nail, Lieut.-Colonel Sir Joseph
Wood, E. (Chest'r, Stalyb'ge & Hyde)


Falle, Sir Bertram G.
Nelson, Sir Frank
Wood, Sir Kingsley (Woolwich, W.).


Fielden, E. B.
Newman, Sir R. H. S. D. L. (Exeter)
Woodcock, Colonel H. C.


Finburgh, S.
Newton, Sir D. G. C. (Cambridge)
Worthington-Evans, Rt. Hon Sir L.


Fleming, D. P.
Nicholson, O. (Westminster)
Young, E. Hilton (Norwich)


Ford, P. J.
Nuttall, Ellis



Forestier-Walker, L.
O'Connor, T. J. (Bedford, Luton)
TELLERS FOR THE NOES.—


Foxcroft, Captain C. T.
Oakley, T.
Colonel Gibbs and Captain Hacking.


Question "That the Debate be now adjourned," put, and agreed to.

CLAUSE 4.—Customs Duties on silk and artificial silk.

Mr. RILEY: I beg to move to leave out the Clause.
If the Chancellor of the Exchequer will accept the Amendment, he will find himself the most popular Member of this House.

Mr. GILLETT: I beg to second the Amendment.

Mr. CHURCHILL: I regret that I am unable to accept the Amendment. I beg to move "That the Debate be now adjourned."

Captain BENN: The reason why this Motion is moved by the Chancellor of the Exchequer is that the new Clauses are finished. Annual taxes have to be moved by the Government year by year, and the Government must defend them. When taxes are perpetual taxes, they have to be attacked by means of private Members' new Clauses. Hon. Members have seen to-day, although there has been great rapidity in our discussions, exactly what happens to new Clauses proposed by private Members. I wish to draw the attention of hon. Members to the chances that will exist next year and in future years to attack the new taxes of the Government,—the McKenna Duties, the Lace Duty, the Silk Duty and so on.

Debate adjourned accordingly; to be resumed To-morrow.

Orders of the Day — GAS REGULATION ACT, 1920.

Resolved,
That the draft of a Special Order proposed to be made by the Board of Trade under Section 10 of The Gas Regulation Act, 1920, on the application of the Preston Gas Company, which was presented on the 25th May and published, be approved.

Resolved,
That the draft of a Special Order proposed to be made by the Board of Trade under Section 10 of The Gas Regulation Act, 1920, on the application of the Harrogate Gas Company, which was presented on the 27th May and published, be approved.

Resolved,
That the draft of a Special Order proposed to be made by the Board of Trade under Section 10 of The Gas Regulation Act, 1920, on the application of the Hastings and St. Leonards Gas Company, which was presented on the 28th May and published, be approved."—[Sir Burton Chadwick.]

The remaining Orders were read and postponed.

It being after half-past Eleven of the Clock, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at Fourteen Minutes before Twelve o'Clock.